Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — HOME DEPARTMENT

Crime (Research)

Mr. Meacher: asked the Secretary of State for the Home Department what percentage of total public expenditure on penal custody of all kinds for convicted persons the Government's present budget on research into the causes of crime constitutes.

The Under-Secretary of State for the Home Department (Mr. Mark Carlisle): £450,000 will be spent in the current financial year by the Home Office on research bearing on the causes of delinquency and the treatment of offenders. This figure approximates to 0·7 per cent. of the expected expenditure on the prison service in England and Wales in that period. Additional research is carried out by prison medical officers and prison psychologists in the course of their normal duties.

Mr. Meacher: Is the hon. and learned Gentleman aware that these figures show that our penal system is still far too closely geared to custody and deterrents and far too little to prevention? Is he also aware that much the most cost-effective means of reducing crime out of the Chancellor's £2,300 million give-away Budget would be a major increase in Home office and external research programmes and in experimental rehabilitation? What is he doing to this end?

Mr. Carlisle: I do not accept that at all. The fact that we spend nearly £500,000 a year on research shows that

the Home Office takes this seriously—[Interruption.] The cost of imprisonment, which includes the cost of keeping those who are there and all the costs of the staff, is extremely large. But part of the purpose of the present Criminal Justice Bill now before the House is to extend the probation service and give greater opportunities for non-custodial penalties.

Life Sentences

Mr. Jeffrey Archer: asked the Secretary of State for the Home Department when he expects that the report of the Criminal Law Revision Committee on life sentences will be received; and if he will make a statement.

Mr. Carlisle: I assume that my hon. Friend has in mind the review which the committee is undertaking of the law relating to, and the penalties for, offences against the person. This is a wide-ranging review and I cannot yet forecast when it will be completed.

Mr. Archer: Is my hon. and learned Friend aware that it is now two years since this review was begun? Perhaps it would be wiser if the matter were brought to Parliament and discussed here; there seems to be a credibility gap on life sentencing at the present.

Mr. Carlisle: So far as the length of the review is concerned, as I said, it is a wide-ranging one, concerning the law relating to, and the penalties for all offences against the person, and it is being carried out by a committee under Lord Justice Edmund Davies. I cannot yet say when it will report. On my hon. Friend's second point, these matters have been discussed during the Committee stage of the Criminal Justice Bill. As for his third point, I do not accept that there is a credibility gap with regard to life sentences.

Obscenity

Mr. Lane: asked the Secretary of State for the Home Department what representations he has received this year about the protection of the public against obscenity.

The Secretary of State for the Home Department (Mr. Reginald Maudling): I recently received, and am studying, proposals for amendment of the law from the


Society of Conservative Lawyers and from the Nationwide Festival of Light. I continue to receive complaints from the public about obscene publications, the display of indecent material, and trends, particularly towards violence, in the cinema.

Mr. Lane: Would my right hon. Friend agree that the majority of the public, who try to steer a middle course between prudery and licence, would like to see even more action by the Government to protect the public interest, possibly along the lines suggested by the Conservative lawyers?

Mr. Maudling: I am certainly grateful for all advice that I receive in this matter. My concern, of course, is not enforcing the law—which is a matter for the police—but if necessary amending it. So far, I have not been persuaded that any proposals put to me would be an improvement, but I am very grateful for all the advice that I get.

Mr. Hamling: Is the right hon. Gentleman aware that the proposals of the Conservative lawyers would make the present law even more absurd than it is now?

Mr. Maudling: I am sure that no proposals coming from that source could possibly have that effect.

Bolton (Meeting)

Mr. Laurance Reed: asked the Secretary of State for the Home Department if he will call for a report from the chief constable on the number of police required to attend the fund-raising meeting in Bolton addressed by the hon. Member for Mid-Ulster (Miss Devlin) at the end of January.

Mr. Maudling: The Chief Constable of Lancashire tells me that 12 police officers were on duty at Bolton Town Hall for this meeting.

Mr. Reed: Is my right hon. Friend aware that many of my constituents have sons and relatives serving in Ulster at this moment and that they have been outraged to learn that three Labour councillors attended this meeting, donning green armbands and passing round the hat? Would he not share my view that behaviour of this kind from anyone in a position of public responsibility is an

utter disgrace and that we would welcome a condemnation of it from the Labour Party?

Mr. Maudling: The general reaction to collection of moneys on behalf of the I.R.A. would be well understood in this House. As for the law on collections, I made this clear, so far as I could, the other day in reply to my hon. Friend the Member for Aldershot (Mr. Critchley).

Northern Ireland

Mr. Bidwell: asked the Secretary of State for the Home Department what plans he now has to bring in legislation to amend the Ireland Act, 1949.

Mr. Duffy: asked the Secretary of State for the Home Department if he has now completed talks with the Northern Ireland Government on internment.

Mr. Biggs-Davison: asked the Secretary of State for the Home Department whether he will make a statement about the situation in Northern Ireland as it affects his ministerial responsibilities.

Mr. Maudling: As the House will be aware, my right hon. Friends the Prime Minister, the Defence Secretary and the Lord President and I had discussions yesterday with the Prime Minister and Deputy Prime Minister of Northern Ireland.
I am not yet in a position to report on these talks.

Mr. Bidwell: Would the Home Secretary agree that any change in the autonomy of the Northern Irish Parliament would necessitate amendment of the Act to which I have referred? Consequently, would he agree with me and deplore any tendency on the mainland to take away the spirit of that Act, that is, not to treat Irish people—from either the North or the South—in this country as foreigners? There is a tendency in some scurrilous sections of the Press to do precisely that, especially arising out of the outrage and madness of Aldershot.

Mr. Maudling: I do not accept the premises on which that supplementary question is based, but certainly the hon. Member is right in saying that any change in the statutory powers of the Northern


Ireland Government would involve a change in the constitution.

Mr. Duffy: Does not the Home Secretary recall that on 7th March he said in the House that the Government would make a statement on the future of Northern Ireland when he judged it to be in the best interests of the people of Northern Ireland? Would not he agree that the best interests of the people of Northern Ireland would be served if the British Conservative Government made up their minds about the future of Northern Ireland and then had the courage to act and say, for the first time in history, that a British Conservative Government would not be deflected by either the hawkishness of some of their own back benchers or by undue pressure from Ulster Unionists?

Mr. Maudling: The answer that I gave previously about the timing of a statement remains valid today.

Mr. Biggs-Davison: Does my right hon. Friend consider that my Bill to amend the Ireland Act so as to provide for a referendum on the Border is, perhaps, enough political initiative to be getting on with? Is not a military initiative called for in order to break the I.R.A. terror and the I.R.A. police State in the virtual "no-go" areas, so that the minority can co-operate?

Mr. Maudling: My hon. Friend's suggestion is extremely interesting, but the Government have always made it clear that they do not believe that this problem can be solved by either military or political initiative alone; both are needed.

Mr. McMaster: Where a number of known psychopathic killers and those even more evil persons who have helped them plan and carry out their hideous acts have been detained, what duty does my right hon. Friend owe to society with respect to their continued restraint?

Mr. Maudling: The duty that the Government owe to society is to do everything possible to protect law and order and to try to achieve a reconciliation between the communities, by which alone the future of Northern Ireland can be assured.

Mr. Merlyn Rees: Although we cannot expect a report on the current negotiations whilst they are in progress, can

the right hon. Gentleman assure the House that it will be the first to hear the results of the conclusion of the negotiations, and that we will not read what purports to be the result of them in the Sunday Press?

Mr. Maudling: I cannot be responsible for reports that purport to give what is happening. But certainly the Government are well aware of the grave issues involved in this matter. It is our desire to make a statement to the House as soon as possible.

Mr. Kilfedder: Following what was said by the hon. Member for Southall (Mr. Bidwell) in his supplementary question, is it not an extraordinary situation that we greatly restrict the entry of citizens of the Commonwealth into this country yet there is no restriction whatever on anyone coming to Britain from the Irish Republic, which prides itself on being a foreign country? Would not the security situation be improved by requiring citizens of Eire to produce passports before entering this country?

Mr. Maudling: This is a unique situation, which has existed for a long time. Any proposed for changing it should be studied with great care.

Mr. Foley: Will the Home Secretary undertake to make a statement and to provide for a debate on the proposals relating to Northern Ireland before the Easter Recess?

Mr. Maudling: That is a matter for my right hon. Friend the Leader of the House. The Government are fully aware of the gravity of the situation and will make a statement at the earliest possible moment.

Mr. Tilney: Is it not time that the people of Ulster were asked, polling district by polling district, whether they prefer government by Stormont or by Dublin?

Mr. Maudling: I rather doubt if that step would commend itself to any party in this tangled situation.

Mr. Peter Archer: asked the Secretary of State for the Home Department whether he has considered the Report of Amnesty International on allegations of ill-treatment in Northern Ireland, a copy of which has been sent to him;


what action he proposes to take; and if he will make a statement.

Mr. Maudling: I have read the report. Five of the cases considered in it were fully examined by Sir Edmund Compton last year; others are being investigated by the police with the co-operation of the Army or are the subject of legal action by the complainants.

Mr. Archer: Will the right hon. Gentleman order an impartial investigation into the other cases? No one would seek to condone indiscriminate violence, in whatever cause, but does not the right hon. Gentleman appreciate that if the Government appear indifferent to substantial evidence of illegalities perpetrated by their own authorities that is more likely to exacerbate than minimise violence?

Mr. Maudling: These allegations are being properly investigated. We must see the result of the investigation.

Mr. McMaster: Is there not clear evidence that there is a seditious force at work in Northern Ireland, and is it not the Government's responsibility in those circumstances to back up the police and the security forces?

Mr. Maudling: I entirely agree with my hon. Friend. The priority in Northern Ireland is to deal with the men of terror and violence. At the same time, I am sure that the security forces themselves would want any complaint against them to be investigated, because they are confident that on investigation it will be shown not to be well-founded.

Mr. George Cunningham: Has the right hon. Gentleman received from the G.O.C. Northern Ireland a response to the reference to him of allegations about the activities of the military in Northern Ireland, referred to him on 17th January and since then investigated by the R.U.C.?

Mr. Maudling: I should require notice of that question, which is a little detailed.

Irish Republican Army

Mr. Winterton: asked the Secretary of State for the Home Department whether he will now make a further statement on his examination of means to

counter the terrorist activities of the Irish Republican Army in Great Britain.

Mr. Maudling: Appropriate steps will continue to be taken, but I have nothing at present to add to the reply I gave to a Question by my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) on 28th February.—[Vol. 832, c. 42.]

Mr. Winterton: I thank my right hon. Friend for that Answer. Is it not now time that the Government acted in the real interests of the United Kingdom, particularly the majority loyalist population of Northern Ireland, and declared the Irish Republican Army illegal throughout the whole of the United Kingdom? Would my right hon. Friend further press his right hon. Friend to close the Border? Also, would he bring pressure upon Mr. Lynch to act in a genuine fashion against the I.R.A. and its off-shoots in the Republic of Ireland?

Mr. Maudling: The main task in Great Britain in dealing with the I.R.A. is to bring to book the people responsible for the outrage at Aldershot. A great deal is being done by the police. I think that the police have the full support of the House in carrying out their work to try to bring those people to book. The main thing is to deal with those who use violence. When it comes to proscribing a particular organisation or organisations, I fully understand the feelings on this matter, but the translation of those feelings into a law on the Statute Book presents considerable difficulty.

Mr. Russell Kerr: How many troops would be required to close the Border?

Mr. Winterton: One division.

Mr. Maudling: My information is that a complete closure of the Border in military terms would be impracticable.

Wandsworth Prison (Married Officers' Accommodation)

Mr. Thomas Cox: asked the Secretary of State for the Home Department what future housing projects are planned for married officers' accommodation at Wandsworth Prison.

Mr. Carlisle: The construction of eight 4-bedroom houses will begin in the coming financial year. Longer-term requirements are being kept under review.

Mr. Cox: I welcome that reply. I am sure that the hon. and learned Gentleman is aware that the accommodation proposed is totally inadequate for the needs of married officers at the prison. Therefore, as a matter of urgency, would he seek to develop further projects which could be submitted to the prison governor and the local prison officers association, because this matter is giving great concern to them, especially as they hope to see a substantial increase in staff in the very near future? Unless accommodation is available, staff recruitment will be seriously curtailed.

Mr. Carlisle: A feasibility study is in hand to provide, by way of redevelopment, 176 married quarters, in the form of maisonettes or houses, but it is unlikely that work will start on that project for a few years yet. Regarding the immediate position, as the hon. Gentleman knows, it has been possible to buy houses on the open market, and my advice is that at present there is no urgent demand for more quarters, other than those I have mentioned.

Trespass

Mr. Farr: asked the Secretary of State for the Home Department if he will express as a percentage of the maximum penalty the average fine imposed by the courts in implementing Section 20(2) of the Firearms Act, 1968, relating to trespassing with a firearm on land.

The Minister of State for the Home Department (Mr. Richard Sharples): Between 1st August, 1968, and the end of 1970 the average fine imposed on summary conviction in England and Wales for this offence was 6·6 per cent. of the maximum.

Mr. Farr: Is not this sort of watery inaction by the courts making the task of the police much more difficult and acting as no deterrent whatever? What will he do about it?

Mr. Sharples: Adequate penalties are available to the courts, and they are being increased by the Criminal Justice Bill now before Parliament. It is not for me to criticise the actions of the courts.

Mr. John Fraser: As the maximum penalty is only £100, if there is evidence that the courts are not taking into account very strong feelings expressed by both

Parliament and country, will the hon. Gentleman consider holding sentencing conferences so that the matter can be discussed and the feelings of Parliament and the country can be made known to the courts?

Mr. Sharples: I am sure that the courts will take note of the views expressed on this matter in the House.

Shoplifting

Mr. Adley: asked the Secretary of State for the Home Department if he will take steps to categorise separately, in the crime statistics, the specific offence of supermarket shoplifting.

Mr. Sharples: My right hon. Friend is still not satisfied that the additional staff and expenditure which would be needed to record this information separately would be justified.

Mr. Adley: Would my hon. Friend say how and under what circumstances categories in the crime statistics are altered? I am sure that he is aware that many of the crimes listed are ancient. Is not supermarket shoplifting a crime which, in the last 15 years, has grown out of all proportion? Would he agree that if more detailed information could be obtained through separate categorisations, this would possibly help to counter what is becoming a great social problem for many people?

Mr. Sharples: The Perks Committee recommended in 1967 that the whole system of categorising crime should be reviewed. The first priority is the separate categorisation of crimes of violence, and this must take precedence over the information requested by my hon. Friend.

Mr. Greville Janner: Is the Minister aware of the tremendous increase in supermarket shoplifting and of the enormous number of acquittals, showing that every honest shopper in a supermarket is in grave risk of unjustified prosecution for a moment of inattention or forgetfulness? Does he not therefore think it right to take some steps to protect the honest shopper in these circumstances.

Mr. Sharples: I know the hon. and learned Gentleman has made a particular suggestion about this subject which is being considered by the working party that is examining the question of shoplifting.

Political Crimes

Mr. David James: asked the Secretary of State for the Home Department whether he will seek powers to make the planting of explosives, attempted or actual political assassination and the hijacking of aircraft treasonable offences.

Mr. Maudling: No, Sir. The criminal law already deals adequately with these matters.

Mr. James: Is my right hon. Friend aware that treason was first defined in the reign of Edward III in 1350 and that the law was amended in 1795 to include:
The use of force to make the King change his counsels…".

Hon. Members: Reading.

Mr. James: I am quoting from a Statute—

Mr. Speaker: Order. The hon. Member is destroying himself, because he is not allowed to do that.

Mr. James: The amended law also included the offence of intimidating Members of either or both Houses of Parliament. Does my right hon. Friend not feel that the crimes to which I have referred all fall within that category?

Mr. Maudling: The penalty for murder, attempted murder or hijacking and causing an explosion which is likely to endanger life or property is already life imprisonment—the highest penalty known to the law.

Police

Mr. R. C. Mitchell: asked the Secretary of State for the Home Department how many new recruits joined the police forces in England and Wales during 1971; how many left the police forces during the same period; and how many of those who left had completed less than five years' service.

Mr. Maudling: The figures are: 7,077; 4,020; 1,770.

Mr. Mitchell: On the 1,770 who left the police force during the last year having completed less than five years' service, has the Home Secretary any categorised information as to why they left?

Mr. Maudling: I am afraid not. We had to make special arrangements to obtain this figure to answer the Question.

Mr. Fowler: Would my right hon. Friend not agree that the 1971 recruiting figures are exceptionally good and give real hope for an end to the police shortage? Would he not also agree that they show how correct it was for the Government to reverse the disgraceful policy of the last Labour Government in restricting police recruiting?

Mr. Maudling: I am certainly pleased with last year's figures, both on recruitment and reduction of wastage, but I am sure that my hon. Friend will agree that there is still a long way to go.

Mrs. Shirley Williams: It is encouraging that police recruitment went up last year although we do not regard it as unrelated to the unemployment situation. Has the Home Secretary considered the possibility of attaching a welfare officer to those police stations which have a great deal of welfare work during the night? This is one of the difficulties the police face. Can he say anything about the recruitment of coloured police officers?

Mr. Maudling: I will be happy to consider the first point. On the second, I would like to see more coloured police officers recruited, but the difficulty is to get the recruits to come forward.

Sir D. Renton: asked the Secretary of State for the Home Department how many more special constables are required in England and Wales; and what steps he is taking to encourage their recruitment.

Mr. Sharples: The total number of special constables at the end of 1971 was 29,990; many more could be used. Recruitment is the responsibility of chief officers of police, who are always on the look-out for suitable volunteers. Some new recruiting material has been prepared and will be available very soon.

Sir D. Renton: Does that answer mean that myright hon. Friend the Home Secretary does not himself wish to give any encouragement to the recruiting of special constables? What is his attitude, bearing in mind that this is a matter of national importance?

Mr. Sharples: It does not mean that at all. It means what I said in my reply—that many more could be used. That is the view of my right hon. Friend and myself. As to publicity, we supply to chief constables centrally posters and leaflets which they can use. Special constables have always been recruited locally, and I think that is right.

Mr. Scott-Hopkins: Does my hon. Friend agree that one of the main barriers to recruiting more special constables, who are urgently needed, is finance? Will he urge our right hon. Friend to do the maximum he can to support recruiting, and make the watch committees supply more money where required?

Mr. Sharples: I do not think that it is a matter of finance. Possibly there has not been enough publicity recently, but recruiting is well within the capabilities of the amounts now available.

Mr. Arthur Lewis: asked the Secretary of State for the Home Department whether, in view of the concern felt by the police at the present position whereby allegations of neglect, malpractice and maladministration made against police officers are investigated by the police, and the fact that this affects promotion and security of employment, he will give the reasons why he will not now seek powers to appoint an appeal and investigating committee under a judge.

Mr. Maudling: I made a statement on 2nd December about the procedure for investigating complaints against the police. A member of a police force who is dealt with for an offence against discipline may appeal to me.

Mr. Lewis: But since then there have been a number of cases where the police and their Federation have complained of the unfairness whereby police officers can be, and are, held up to investigation sometimes by people in the very force in which they have had a disagreement, and this may impede the promotion of the person being investigated. Is it not unfair that a policeman can be charged by anyone and then find that people he has quarrelled with will investigate the complaint against him? Surely there should be an independent means of investigation?

Mr. Maudling: I do not think so. Where a member of a disciplined force

is the subject of a complaint, it must be investigated by his commanding officer. If there is any feeling of injustice, he can appeal to me.

Mr. Fowler: Does my right hon. Friend also agree that although no one wants to discourage genuine complaints, the vast majority of complaints made against the police today are both trivial and groundless?

Mr. Atkinson: How does the hon. Gentleman know?

Mr. Fowler: Therefore, could my right hon. Friend examine ways in which the burden on the police can be reduced in dealing with that category of complaints?

Mr. Maudling: I should very much like to find a way of doing that. It is very difficult. The trouble is that it is a one-way option: a person complains against the police, and if his complaint is established he wins; if it is not, he loses nothing.

Mrs. Shirley Williams: I acknowledge the extreme importance of maintaining public confidence in the police, which is very largely justified, but I also recognise the effect that a small number of such cases may have. Has the right hon. Gentleman given any consideration to the suggestion of associating an independent lawyer with at least certain inquiries into police indiscipline?

Mr. Maudling: I think there is a misunderstanding here. It is already a statutory requirement that a complaint about any behaviour that may involve a criminal offence must be referred to the independent judgment of the Director of Public Prosecutions.

Toy Guns

Mrs. Joyce Butler: asked the Secretary of State for the Home Department if he will ban the sale of toy guns and bullets, particulars of which have been sent to him by the hon. Member for Wood Green; and if he will make a statement.

Mr. Sharples: My right hon. Friend is not convinced that any hazard presented by this particular toy is so serious as to justify such action.

Mrs. Butler: Does the Minister of State realise that this was sent to him by a


constituent, who feels—and I agree with her—that the small metal bullets supplied with the gun are extremely dangerous for any children to use particularly if one of them hit a child in the eye? Is the hon. Gentleman satisfied that he has the facilities in this Department adequately to vet this type of toy, bearing in mind all the other responsibilities that his Department holds.

Mr. Sharples: The toy has been very fully vetted. It was tested at length by ballistics experts, who found that a pea fired from a normal pea-shooter had twice the velocity of a missile fired from this weapon.

European Economic Community

Mr. Ashton: asked the Secretary of State for the Home Department what estimates or investigations he has made of the effect on the prevention of crime of easier international travel, following Great Britain's entry into the Common Market.

Mr. Sharples: I do not expect there to be any significant effect.

Mr. Ashton: Would the Minister of State tell us why?

Mr. Sharples: Because normal immigration controls would operate and it would be possible to keep undesirable people out in the same way as now.

Market Research

Mr. Leslie Huckfield: asked the Secretary of State for the Home Department what representations he has received for amendments in the law affecting confidentiality and privacy in gathering market research information.

Mr. Carlisle: None, Sir.

Mr. Leslie Huckfield: Is the Minister not aware that questions like:
V.D. is a just punishment for illicit sex
and
If someone offered me pot I might try it".
are all part of a questionnaire by Mary Agar Field Services on behalf of the supposedly respectable Leo Burnett London Press Exchange advertising agency? The survey offered a B.M.C. Mini as the prize. [Interruption.] One can in the automatic version. How does

the Minister of State believe that this will help anyone to sell anything to anyone and is it not about time he introduced—

Mr. Speaker: Order. That is quite enough.

Mr. Carlisle: Obviously one would deplore any form of sales technique which seemed in any way to encourage young people to go in for drugs, which I gather is one of the matters the hon. Member mentioned. But the fact remains that we have had no complaints in the Home Office, and I am not quite sure whether it affects privacy.

Juveniles (Trials in Adult Courts)

Mrs. Renée Short: asked the Secretary of State for the Home Department what information he has as to the number of juveniles who have been tried in adult courts, when charged jointly with adults, during the last five years.

Mr. Carlisle: Information in precisely the form requested is not readily available. In each of the five years 1966–1970, an average of just under 16,500 juveniles were proceeded against in adult magistrates' courts in England and Wales in accordance with the provisions of Section 46(1) of the Children and Young Persons Act, 1933.

Mrs. Short: As this arrangement is usually made in order to facilitate the courts and not to help the young persons concerned, does the Under-Secretary of State not think that he ought to see, if young people are brought before the magistrates' courts and if they are required to be remanded, that they should be remanded in suitable homes and not put in adult prisons which provide a quite unsuitable atmosphere for young people of 11, 12 or 14 years of age?

Mr. Carlisle: In reply to that part of her supplementary question that arises on the Question, I do not think that that is so. There are obvious advantages in trying adults and juveniles together where they appear on a joint charge, and that covers the vast majority of cases to which the figure of 16,000 relates. The powers of the magistrates are limited unless they remit to the juvenile court for sentence. On the question about remanding those


of a young age in adult prisons, clearly there is no power to remand anyone under 14, and those aged between 14 and 17 are remanded in adult prisons only where, because the court gives an unruly certificate, they cannot be held in other forms of accommodation.

Immigrants

Mr. Mather: asked the Secretary of State for the Home Department how many cases of illegal entry by Commonwealth immigrants have been detected in the last 12 months.

Mr. Maudling: The information available to me is that during the twelve months ending 29th February, 1972, 26 cases of illegal entry were detected and 73 illegal immigrants were apprehended.

Mr. Mather: Has my right hon. Friend any information about the number of illegal flights carrying immigrants into this country over the same period.

Mr. Maudling: We only have records of the chaps we catch.

Bigamy

Mr. Tilney: asked the Secretary of State for the Home Department how many prosecutions for bigamy took place in each of the last two years.

Mr. Carlisle: In 1969 and 1970, the last two years for which statistics are available, the number of persons proceeded against in England and Wales for bigamy were 43 and 56.

Mr. Tilney: Is my hon. and learned Friend aware that in a considerable number of cases of bigamy known to the police no action is taken? Does this not bring the law into disrepute?

Mr. Carlisle: It is true that there are far more known cases of bigamy than prosecutions. The decision whether or not to prosecute rests entirely with the individual chief constable. I understand that chief constables do not take proceeding in such cases unless they believe that it is in the public interest to do so.

Mr. Fell: Would not universal Government-sponsored vasectomy obviate the need for all such questions?

Mr. Carlisle: I doubt it.

Commonwealth Citizens (British Wives)

Mr. Latham: asked the Secretary of State for the Home Department whether he will, at an early date, introduce legislation to remedy the discrimination currently practised against British women who marry Commonwealth citizens and are afterwards expected to reside in the country of their husbands.

Mr. Sharples: No, Sir. My right hon. Friend's predecessor decided in January, 1969, to withdraw the concession under which a Commonwealth citizen was allowed to settle here in right of his wife, and the reasons he then gave are valid today.

Mr. Latham: I know all about the statement of my right hon. Friend the present Home Secretary's predecessor. But in these days of moves towards women's rights, women's liberation, equality in pay and social equality, is it not reasonable to abandon the concept of the wife as part of the husband's chattels? Should we not accept that a woman has as much right to expect her husband to live in the country of her origin as the husband has to expect his wife to live in the country of his origin? Should we not bring ourselves up to date in these matters and leave it as something to be settled between the two parties to a marriage rather than something for decision by the Government of the day?

Mr. Sharples: No, Sir; I do not accept what the hon. Gentleman says. The change was introduced in 1969 because of the large and increasing number of men taking advantage of the existing concessions as a means of circumventing the employment voucher scheme. Now that the number of admissions is very much smaller there is all the more possibility of an abuse occurring in this way.

Mr. John Fraser: In drafting the new immigration rules, will the Home Office make it quite clear as respects women who are United Kingdom citizens, not Commonwealth citizens, that their husbands will be allowed to stay in this country unless the marriage is a transparent evasion of the immigration restrictions?

Mr. Sharples: I shall bear in mind what the hon. Gentleman says in the drafting of the immigration rules. The


matter was discussed at considerable length in Committee during the passage of the Immigration Act.

Mr. Bidwell: Is the Minister also aware that there are some overhang cases where betrothals were entered into by Indian women and men, under their marriage system, having regard to the circumstances that prevailed before January, 1969? Will he undertake to look favourably at those cases, a kind of residue, which are still in the papers and have not been cleared up, where there is still considerable anxiety? Is it not a fact that the provision is not an automatic ban on allowing husbands to join wives in this country?

Mr. Sharples: As I think the hon. Gentleman knows very well, individual cases of this kind are considered on their merits.

Legal Aid

Mr. Scott-Hopkins: asked the Secretary of State for the Home Department how many applications for legal aid in 1970 and 1971, respectively, were granted by magistrates sitting in the county of Derbyshire and the borough of Derby.

Mr. Carlisle: In 1970, 1,154 in the county and 601 in the county borough. Statistics for 1971 are not yet available.

Mr. Scott-Hopkins: Is my hon. and learned Friend aware that there is a great deal of unrest about whether everyone is receiving a fair crack of the whip there? My hon. and learned Friend took part in a programme on television which highlighted the fault that exists now. What action has he taken to remedy the position?

Mr. Carlisle: My hon. Friend might like to know that in Derby borough the percentage of applications granted was as high as 94·6, and in Derbyshire county 96·6, both of which are above the national average. The granting of that percentage of applications shows that the magistrates are obviously considering every application with the utmost care.

Family Advice Centre, Birmingham

Mrs. Doris Fisher: asked the Secretary of State for the Home Department if he will give consideration to financial help towards the Family Advice Centre,

adjacent to Winson Green Prison, Birmingham.

Mr. Carlisle: Yes, Sir. But I am not yet ready to announce a decision.

Mrs. Fisher: In view of the very worthwhile voluntary work being undertaken by this centre in helping the wives and children of prisoners in a practical way, will the hon. and learned Gentleman be very sympathetic towards any application that may be made?

Mr. Carlisle: Certainly. It is because we recognise the valuable work that this project is doing that we are in principle prepared to give it financial help. We hope to announce details as soon as possible.

Nuclear War (Civil Defence)

Mr. Hugh Jenkins: asked the Secretary of State for the Home Department what is the present state of preparation for nuclear war in terms of maintenance of Government; what personnel it is intended to locate in underground bunkers; and whether it remains his policy that preparations cannot be made for the survival of the population as a whole.

Mr. Sharples: It is the view of this Government, as of their predecessors, that useful preparations can be made to reduce the effects of nuclear war in the respects mentioned.

Mr. Jenkins: Would the hon. Gentleman suggest to the Prime Minister that this policy should be looked at again, having regard to the fact that it is a policy of basing national defence on a weapon from which the public cannot be protected? Is it not the case that in the last war the few died to save the many, whereas our present policy is the reverse of this? If this were publicly realised would there not be an outcry against this policy?

Mr. Sharples: The whole policy has been under re-examination in recent months. A circular was issued to local authorities yesterday dealing with Government policy in this respect, and a copy has been placed in the Library.

Mr. Paget: Is it not a fact that the nuclear threat today has increased at


least a thousand-fold over what it was at the time that this kind of regulation was introduced, and that any attempt at defence or even mitigation today is totally futile?

Mr. Sharples: No, Sir, I would not accept that. Certainly in areas outside the immediate point of impact it is possible for people to take precautions which will enable a number of lives to be saved.

Remands

Mr. Winterton: asked the Secretary of State for the Home Department whether he will expedite the investigation being carried out by the Home Office into the remand situation in the United Kingdom; and if he will make a statement.

Mr. Carlisle: I assume that my hon. Friend has in mind the working party which is considering bail procedures in magistrates' courts in England and Wales. The working party will complete its task as expeditiously as possible.

Mr. Winterton: I thank my hon. and learned Friend for that promising answer, but may I ask him whether he agrees that bail hostels are one method which could be used to overcome present difficulties? Does he feel that sufficient money will be forthcoming for the establishment of more of these hostels?

Mr. Carlisle: I welcome the fact that a bail hostel was opened by my right hon. Friend last year with the help of private finance. As my hon. Friend knows, the Criminal Justice Bill makes provision for probation committees to have bail hostels. This is an important and welcome development.

British Summer Time

Mr. David James: asked the Secretary of State for the Home Department whether he will ensure that next year British Summer Time is brought back into force over the last weekend in February.

Mr. Carlisle: No, Sir. I believe that the present arrangements, under which British Summer Time starts during the third weekend in March, conforms most closely to the wishes of the public.

Mr. James: Happily I have no time to cite an Act of 1795 in this supplementary question! Is my hon. and learned Friend aware that in 1970 Parliament decided to revert to G.M.T. to save one hour for farmers and schoolchildren during the shortest days? Is he aware that if he looks at a nautical almanac he will find that that hour has been restored by the sun by the second half of February? Does he recognise that thereafter the extra hour is extremely important to gardeners, coarse fishermen, golfers, and everyone else who likes outside life.

Mr. Carlisle: The decision to revert to British Summer Time, as I remember it, was taken on a free vote quite recently. My hon. Friend does not have to go back as far as the 18th century for a Statute, because there was one as recently as 1968. I accept that different people have different views over different interests but I believe that on the whole the present situation meets the wishes of the majority.

Mr. Merlyn Rees: Does the hon. and learned Gentleman recall that the research done for the Home Office showed that fewer people were killed in road accidents during the period of the experimental scheme? Will he cause further investigations to be made so that, whatever the decision of the free vote was, we can look at the facts before we have to take a decision again?

Mr. Carlisle: I do not accept that. The facts were known to the House when the debate took place and the House in its wisdom by a free vote, decided to revert to British Summer Time. That was the wish of the majority in the House. The hon. Gentleman may disagree, but he was outvoted, and this Government accept the decision taken then.

Mr. Tom King: Does my hon. and learned Friend accept that many in the House will find that a disappointing answer and do not accept that there is a general demand for the return of full-scale British Summer Time? Does he recall that there was widespread support for an Early Day Motion to this effect when the matter was debated, urging that we do not need to go back to the full extent of British Summer Time?

Mr. Carlisle: I understood that the criticism of the hon. Member for Leeds, South (Mr. Merlyn Rees) was about reverting to British Summer Time from British Standard Time. I appreciate that my hon. Friend has raised a point on which there are differing views. I can only repeat that as recently as 1968 the present dates for Summer Time were set. The Home Office has no reason to think that they do not accord with the views of many people throughout the country.

Oral Answers to Questions — RHODESIA

Miss Lestor: asked the Prime Minister if he will go to Southern Rhodesia after the return of the Pearce Commission to seek to meet the African spokesmen who have opposed the proposed settlement.

Mr. Arthur Davidson: asked the Prime Minister if he will pay an official visit to Rhodesia after the return of the Pearce Commission.

The Prime Minister (Mr. Edward Heath): No, Sir. The Pearce Commission has listened to all shades of opinion in Rhodesia, and I await its report.

Miss Lestor: Does the right hon. Gentleman not agree that one of the tragedies of the Rhodesian situation is that the African spokesmen were not involved either with the circumstances that led to the proposed settlement or with the Commission that was elected to present it to the Rhodesian people? Will he therefore give an undertaking that whatever the result of the Pearce Commision he will immediately make contact with the African leaders to find out exactly what is their point of view?

The Prime Minister: My right hon. Friend the Foreign Secretary had contact with a large number of African leaders when he was in Salisbury in connection with these negotiations. We must now await the report of the Pearce Commission.

Mr. Foley: Will the right hon. Gentleman comment on the representations that were made to him directly by Bishop Muzorewa, the Chairman of the National African Council, who asked whether, if

Pearce returned a "No", the Government would maintain sanctions?

The Prime Minister: My right hon. Friend the Foreign Secretary has said that if the decision of the Pearce Commission is "No", then the situation remains as it is today. He has always made that quite clear. As to the bishop's letter, it was a lengthy one, containing a large number of points, and I replied to it in detail, point by point.

Mr. Healey: I am grateful to the right hon. Gentleman for that last answer. Can he assure the House that in view of that answer he will now express to the American Administration Her Majesty's Government's deep disappointment at the action that it has taken in removing sanctions on chrome and asbestos? As there is widespread opposition in the United States to this decision, which was taken by the American Congress without the authority of the American Government, is there any excuse whatever for the Governments supine acceptance of the decision in the United Nations discussions?

The Prime Minister: This is a matter between the United Nations and the United States, because it is a question of a mandatory Resolution. It is not for us to interfere with discussions in the American Congress. This is a matter for the United Nations to deal with.

Oral Answers to Questions — HOUSING FINANCE BILL

Mr. Meacher: asked the Prime Minister what reply he has given to delegations that have recently come to see him to request the total or partial withdrawal of the Housing Finance Bill.

The Prime Minister: I told the right hon. Member for Grimsby (Mr. Crosland) and his hon. Friends that I did not think that such a meeting would serve any useful purpose, since the Government were resolved to proceed with the Bill and to carry it into law.

Mr. Meacher: Has the Prime Minister still not learned, even after U.C.S., Rolls-Royce, compromise with the T.U.C. and now the re-introduction of the I.R.C. and investment grants under another name—[Hon. Members: "Reading."]—that confrontation will not pay off in


British politics? Will he withdraw the Bill or tone it down, or is he so rigid that he—[Interruption.]—

Mr. Speaker: Order. That is enough.

The Prime Minister: The hon. Gentleman ought to learn his own supplementary questions. The answer is "No, Sir".

Mr. Redmond: Has my right hon. Friend met a number of people, as I have, who are extremely distressed by Socialist propaganda about the Bill and have no conception of the number of rents that will be reduced?

The Prime Minister: I gave the figures to the House a short time ago. Two million tenants, both in local authority and in private tenancies, will receive rent rebates under the Bill. Whereas the last Administration in their White Paper paid lip service to the idea that there should be rent rebate schemes—certainly for local authority tenancies, although they did not tackle private tenancies—the plain fact was that in 1971, 40 per cent. of local authorities still had no rent rebate scheme. The Bill will deal with that position.

Oral Answers to Questions — CONFEDERATION OF BRITISH INDUSTRY (MEETING)

Mr. Onslow: asked the Prime Minister if he will issue an official invitation to the Leader of the Opposition to attend his next official meeting with the Confederation of British Industry.

The Prime Minister: No, Sir.

Mr. Onslow: Should not the Leader of the Opposition be asked to do something to justify his existence? If he could be persuaded to sit quietly through such a meeting, would it not show the Leader of the Opposition that if there is any anaemia in British industry it is the result of six years on the poison drip of Socialism—and that this week's Budget should provide a cure?

The Prime Minister: I think that my hon. Friend is asking a great deal of the Leader of the Opposition.

Mr. C. Pannell: On a point of order. Recently, Mr. Speaker, you rebuked my hon. Friend the Member for Oldham, West (Mr. Meacher) by saying "Enough

is enough". Surely this is an abuse of Parliamentary Questions. Whatever else the Prime Minister is responsible for, he is not responsible for the Leader of the Opposition or the Labour Party. Will you therefore deal with the pranks and platitudes of the hon. Member for Woking (Mr. Onslow)?

Mr. Speaker: Order. I share the right hon. Gentleman's view that far too many speeches are made by way of supplementary questions.

The Prime Minister: I have myself come to the same conclusion as that of the right hon. Member for I needs, West (Mr. C. Pannell). My hon. Friend at the beginning of his supplementary question was asking a great deal when he said that I should ask the right hon. Gentleman the Leader of the Opposition to sit quietly through such a meeting. That is asking too much of him.

Oral Answers to Questions — BURNHAM COMMITTEE (MINISTERIAL CO-ORDINATION)

Mr. David Steel: asked the Prime Minister whether he is satisfied with the co-ordination between the Secretaries of State for Education and Science, for Scotland and for Wales on the instructions which they give to their representatives on the Burnham Committee; and if he will make a statement.

The Prime Minister: My right hon. Friends already co-ordinate their policies on all matters of common interest, including teachers' pay. The three Burnham Committees and the Scottish Teachers' Salaries Committees are, however, separate and independent negotiating bodies, each properly concerned with its own field.

Mr. Steel: The last part of that answer will be regarded as significant. As they are all independent bodies, why is the management side of each body stuck at an offer of 7 per cent.? Is this not a directive from the Treasury? Will the right hon. Gentleman give the House an undertaking that these independent bodies will examine independently each wage claim on its merits?

The Prime Minister: They are independent bodies, and that is their job. As


there is disagreement between management and teachers, these matters have now gone to arbitration.

Oral Answers to Questions — PRESIDENT POMPIDOU (TALKS)

Dr. Gilbert: asked the Prime Minister if he discussed future arrangements for the defence of Western Europe in his recent talks with M. Pompidou.

The Prime Minister: European security was among the subjects discussed at my meeting with the President of France.

Dr. Gilbert: What guarantees can the right hon. Gentleman give to the House that should the Common Market decide at some future date to extend its activities into defence any British adherence to such an arrangement will be subject to scrutiny more substantial than the Order in Council procedure provided for under the European Communities Bill?

The Prime Minister: If the European Community wishes to extend in fields beyond the Treaty of Rome there has to be a new treaty.

Mr. Biggs-Davison: Is it not essential that the fullest defence partnership should be achieved in Western Europe as early as possible, and at any rate in advance of a European security conference?

The Prime Minister: I agree very much with the first part of my hon. Friend's supplementary question, but I should have thought this was unlikely to be possible before a European security conference. It is generally hoped that there might be a European security conference in 1973. On Western European security, a start has been made in particular with the Eurogroup of N.A.T.O., which was started by the former Secretary of State for Defence, but I cannot tell my hon. Friend that progress will be substantial before a European security conference.

Mr. Healey: Will the right hon. Gentleman tell the House whether President Pompidou is now prepared for France to join the Eurogroup inside N.A.T.O.? Secondly, in view of the fact that he told a correspondent of Le Monde

that at the meeting at the Elysee President Pompidou thought the time was not ripe for discussing Anglo-French nuclear co-operation, will the right hon. Gentleman tell us whether President Pompidou held a different view at the meeting at Chequers last weekend?

The Prime Minister: On the latter point, the view of both of us remains the same, that the time is not ripe to discuss these matters. My views are well known. At the Elysee we also agreed, as the right hon. Gentleman said, that the time was not ripe for dealing with this. The question of France and N.A.T.O. was not one of the aspects that we discussed. We concentrated on the question of a European security conference, what could be achieved, how the preparations could be carried out, and what our policies should be at the conference.

Mr. Blaker: asked the Prime Minister what discussion he had with President Pompidou during the latter's recent visit about the liberalisation of world trade.

The Prime Minister: President Pompidou and I found ourselves in general agreement on trade matters. It will be in the interest of the enlarged Community that there should continue to be orderly progress towards the liberalisation of world trade; and as the world's largest trading unit it will have a special responsibility in this regard.

Mr. Blaker: May I draw the attention of my right hon. Friend to the recent joint declaration made by the European Community countries and the United States in which they undertake to initiate world trade negotiations next year for the expansion and the ever-increasing liberalisation of world trade? Does not that declaration confirm that the European Community, far from being an inward-looking body, is likely to be a powerful force in the growth of world trade?

The Prime Minister: Yes, I agree with my hon. Friend. We were of course consulted about this matter and we warmly support the declaration. The Community demonstrated in the Kennedy Round that it was prepared to work seriously and hard over a considerable period


of time to achieve greater liberalisation of world trade, and that is still its attitude.

Mr. Pardoe: Is the right hon. Gentleman aware that one of the greatest agents leading towards the liberalisation of world trade is the maximum flexibility of international exchange rates? Did he emphasise to President Pompidou at his recent meeting that we in this country and Her Majesty's Government are—if necessary, against France—on the side of those who are working towards the maximum flexibility of international exchange rates?

The Prime Minister: It depends what the hon. Gentleman means by the flexibility of exchange rates. There is a general desire amongst all members that margins should be narrowed within the Community. This does not preclude wider margins in relation to the world outside the Community. If the hon. Gentleman means that from time to time members of the I.M.F. will change their parities, either upwards or downwards, the hon. Gentleman is right. If he means that all currencies should be floating, the experience after 15th August showed that whereas many people had previously said that they would welcome such a situation, it began to have a deleterious effect on world trade and uncertainty spread, particularly in the heavy capital industries which were involved in long-term contracts. Therefore, most people in business came to the conclusion that this was not something with which they wished to live.

Mr. Shore: Will the Prime Minister impress on President Pompidou that trade liberalisation, if it is a serious objective, is quite inconsistent with the pattern of special trade preference which France and other countries in the Six have together been pursuing in the Mediterranean and associated areas?

The Prime Minister: I cannot accept that doctrine. We never accepted it with Commonwealth preference—and the right hon. Gentleman has been the strongest supporter of Commonwealth Preference against going into the E.E.C. What we have in the Western world is a generalised system of tariff preferences for the developing world, and that is of advantage to all.

Oral Answers to Questions — TRADES UNION CONGRESS (TALKS)

Mr. Joel Barnett: asked the Prime Minister if he will make a statement on his talks with the Trades Union Congress.

The Prime Minister: I would refer the hon. Member to the answer I gave on 14th March to a Question from the hon. Member for Midlothian (Mr. Eadie).—[Vol. 833, c. 83–4.]

Mr. Barnett: In view of the distinct lack of enthusiasm of his back benchers for the new interventionist policies, will the right hon. Gentleman give consideration to appointing a member of the T.U.C. as the new Minister for Industrial Development?

The Prime Minister: I think the hon. Gentleman has realised the nature of the organisation which is being set up and which will be responsible to a Minister. There is no change in this. We had a similar organisation, although not on such a scale, when I was Secretary of State for Regional Development in 1963–64. This is desirable in its extended form to give the greatest possible drive to the renewal of industry in the regions.

Mr. Orme: In its meeting with the Prime Minister what did the T.U.C. have to say about the Industrial Relations Bill and the barrier which this presents to improved industrial relations?

The Prime Minister: The long discussions that my colleagues and I had with the T.U.C. on the last occasion showed that the Industrial Relations Bill is no longer a barrier to good contacts between trade unions and Government, nor need it be a hindrance to industrial relations—exactly the reverse.

Sir D. Renton: Is my right hon. Friend aware that fruitful co-operation between the T.U.C. and Conservative Governments is nothing new, and has taken place under every Conservative Government since the war?

The Prime Minister: I think that is how things should be with organisations outside Parliament. They work with Governments of whatever colour. I do not think that the T.U.C. would claim the


right to dictate to a Conservative Government that we should go against what we said in our election manifesto about industrial relations.

BUSINESS OF THE HOUSE

Mr. Harold Wilson: May I ask the Leader of the House to state the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw): The business for next week will be as follows:
MONDAY, 27TH MARCH.—Conclusion of the debate on the Budget.
Motion on the Regional Employment Premium (Continuation of Payment) Order.
Remaining stages of the Road Traffic Bill [Lords].
TUESDAY, 28TH MARCH.—Progress on the remaining stages of the Sound Broadcasting Bill.
Motions on the Farm Capital Grant (Variation) Scheme.
WEDNESDAY, 29TH MARCH.—Completion of the remaining stages of the Sound Broadcasting Bill.
THURSDAY, 30TH MARCH.—It will be proposed that the House should meet at 11 a.m., take Questions until 12 noon and adjourn at 5 p.m. until Monday, 10th April.

Mr. Wilson: Since I understand that there is to be no statement on the Northern Ireland discussions today, may I ask the right hon. Gentleman this question? Although I do not press him about the next stage, if any, of the discussions, would he undertake that as soon as the situation is clarified—I do not suggest it should be earlier than that—a statement will be made to the House at the earliest possible moment? Is he aware that if a decision is reached in time it will be better to make a statement by interrupting business at 10 o'clock tonight, or as I am sure the House would agree on so grave a matter as this, that there should be a statement tomorrow morning at 11 o'clock? Is he further aware that for such a statement to have to wait over the weekend, although it might suit the convenience of the House in other ways,

would open up the possibility of leaks in Belfast and subsequent rumours, with all the dangers that might follow? Does he recognise that it would be unacceptable to the House if the House were not told first, just as I believe it would be unacceptable to the right hon. Gentleman in his position as Leader of the House?
Secondly, is the right hon. Gentleman aware that there has so far been no statement by the Home Secretary about the action of the police in many raids carried out all over the country, and that some extremely disturbing information has now come to light in the Press? Whatever may have been the motives for the raids, particularly in relation to the retention of documents which have nothing to do with threats of violence, will he press his right hon. Friend to take an early opportunity to make a statement to the House? Otherwise there will be the strongest desire for this matter to be debated on the Adjournment of the House next week.

Mr. Whitelaw: I am grateful to the right hon. Gentleman for the way in which he put his first point. I assure him that a statement will be made to the House as soon as it possibly can be. I think that I should not go further than that. On the second point, I have made representations to my right hon. Friend, and the situation remains exactly as it was when I set out the legal position last week.

Mr. Kilfedder: Is my right hon. Friend aware that both wings of the I.R.A. are stepping up the foul campaign of forcing the Government to make hasty decisions? Could it be made clear that if the statement is delayed over the weekend murder and mutilation will be deplored—and in the present situation that is too weak a word—by hon. Members on both sides of the House?

Mr. Whitelaw: I agree, as I am sure does the whole House, with my hon. Friend's view that violence of any sort is to be utterly condemned. In regard to any question of a statement, I have nothing to add to what I said to the Leader of the Opposition.

Mr. Ashley: Am I right in understanding that the right hon. Gentleman has said that before Easter there will be


a debate on televising the proceedings of the House? If not would he clarify his thinking on this matter?

Mr. Whitelaw: The hon. Gentleman did not misunderstand me; that is what I said. I have failed to do so, and I apologise to the House, but there have been other factors which have made it difficult for me to have such a debate before Easter.

Mr. Hastings: In regard to the raids which took place in the early hours of the morning, and which were referred to by the Leader of the Opposition, would my right hon. Friend not agree that if a statement is to be made about this matter it would also be helpful to the House to have a statement on the aims and objectives of the International Socialists and what they are up to?

Mr. Whitelaw: I set out the position, correctly as I understood it, last week and I have nothing further to add to what I then said.

Mr. Foley: If I may revert to the question of a statement on Northern Ireland, may I ask the right hon. Gentleman to bear in mind that this is probably the major political issue before the Government and the nation today? Will he give an undertaking that there will be a statement and an opportunity of a debate before the Easter Recess?

Mr. Whitelaw: I certainly agree with the hon. Gentleman about the serious nature of the problem to which he refers. However, it would not be right for me in the circumstances to go any further than I have already gone in answer to the Leader of the Opposition.

Mr. McMaster: Is my hon. Friend aware that what is of maximum importance is that the agreement should be correct and acceptable to all members of the community on both sides, and that the Government should not be under pressure from anybody in this country or in Northern Ireland to make an early statement? Since this matter is of such supreme importance, is it not necessary to get any such statement completely right?

Mr. Whitelaw: I note what my hon. Friend says, and I have nothing further to add on the question of a statement.

Mr. Latham: In contrast to what happened in the House yesterday, could the right hon. Gentleman assure me that before the Easter Recess he will not come to the Dispatch Box to make a statement about cats and mice but that, instead, we shall have a statement from a Minister in the Department of the Environment so that we may have a chance to question him about interference with the traditional rights of free speech and public assembly in Trafalgar Square, the banning of which this coming Sunday may provoke more trouble than it prevents?

The Speaker: Order. I think I can help the hon. Member by informing him that I have selected that subject as one of the items to be discussed in the debates on the Adjournment.

Mr. Whitelaw: I am grateful for what Mr. Speaker has said. It enables me to know something of which I was not previously aware. I do not quite see the connection between cats and mice and the other matter to which the hon. Gentleman draw attention. I did not seek to come to the House to make a statement on cats and mice; I was asked a question about that subject. If one is asked a question about something in this House, one must reply to it.

Mr. Thorpe: Is the right hon. Gentleman aware that hon. Members in all quarters share the view expressed by the Leader of the Opposition that the Government will have to decide the moment to come to the House and make a statement on Northern Ireland? The right hon. Gentleman asked whether such a statement could be made before the weekend, and the Leader of the House said he could not give an answer to that question. Could he at least say that the House will certainly have a statement before we go away for the Easter Recess?

Mr. Whitelaw: Yes, I can certainly give that assurance.

Mr. St. John-Stevas: May I support what was said by the Leader of the Opposition about the desirability of a statement before the weekend since Government policy can only be harmed by a further weekend of Press speculation? Is it not possible that the activities of the


I.R.A. are directed towards holding up Government policy in this regard rather than hastening it on?

Mr. Whitelaw: I feel I should not be drawn into any of these matters on either side of the question, except to say that I have nothing further to add to what I said to the Leader of the Opposition. I feel that in the circumstances what I said was as forthcoming as it could possibly be.

Mr. Harold Wilson: I think that the right hon. Gentleman understood the purport of what I asked before. However, some confusion may have arisen as a result of one or two questions which have been asked since. Is the right hon. Gentleman aware that I was not saying that it was desirable to rush a decision unduly? There have been long delays over the past weeks, but it would be wrong now to rush a decision and perhaps get the wrong one. All that I was asking the right hon. Gentleman, especially in relation to the weekend, was that if a decision were reached it should be given to the House even at an inconvenient hour because once a decision is reached it will leak and there will be rumours. It will be better for this House, the country and, above all, Northern Ireland to have the correct facts whether it is before the weekend or whether it has to wait until the beginning of next week.

Mr. Whitelaw: I thought that that was the position to which I was replying in saying that a statement would be made as soon as possible. "As soon as possible" means that as soon as a decision has been reached it will immediately be made known to this House.

Mr. John Mendelson: Quite apart from the request for a statement which has been made by my right hon. Friend the Leader of the Opposition, will the right hon. Gentleman recall that the Opposition rightly facilitated the passing in one day of the legislation which the Government required for the Army in Northern Ireland, and that the right hon. Gentleman undertook that there would be a full day's debate in Government time—[An Hon. Member: "Speak for yourself."] I am speaking for myself when I say that the Opposition rightly facilitated the passing of that legislation, though I do not believe that I speak entirely for myself

when I say it. But will the Leader of the House now say that after a statement has been made it will be desirable to have a debate before the House adjourns for Easter? It is very important that the recess should not intervene without Parliament having an opportunity to bring its mind to bear on the Government's proposals.

Mr. Whitelaw: I note the importance of that remark. At this stage I think it is right to go no further than what I have said about a statement. But I recognise what the hon. Gentleman says.

Sir C. Taylor: Why do not the Government declare the I.R.A. an illegal organisation in the United Kingdom? Surely that would have the effect of dissuading university students from collecting money for arms to be used against British troops.

Mr. Russell Kerr: On a point of order, Mr. Speaker. Is not this a policy question and not a matter of business? Cannot the hon. Member for Eastbourne (Sir C. Taylor) be directed in that sense?

Mr. Speaker: I was finding difficulty in reconciling the hon. Gentleman's question with the business for next week.

Mr. Whitelaw: I understand that my right hon. Friend the Home Secretary answered a Question on that subject earlier this afternoon.

Mr. Wellbeloved: Is the Leader of the House aware that there are 10 Private Members' Bills in the queue for Standing Committee C and that the Bill at present committed to it, the Night Assemblies Bill, apart from being a severe threat to our civil liberties, is a vicious attack on young people? Will he consider allocating some of these Private Members' Bills now in the queue to other Standing Committees as they become vacant?

Mr. Whitelaw: I have always adopted what I consider to be the wise posture for a Leader of the House. That is how Private Members' Bills and business should be conducted within the normal confines of the time allotted for Private Members' Bills and business. I must keep to that position.

Mr. Blaker: With regard to my right hon. Friend's reply to the hon. Member for Stoke-on-Trent, South (Mr. Ashley), will my right hon. Friend go a little further? He will be aware that a substantial number of hon. Members would


like to have a debate on the televising of the proceedings of this House. While we understand why my right hon. Friend has not been able to arrange such a debate, will he assure us that he will do his best to do so before long?

Mr. Whitelaw: I have promised that there will be a debate on the televising of the proceedings of this House which I think it is generally agreed should arise on a Motion put forward by Private Members, and time will be found for that.

Mr. Fitt: Reverting again to Northern Ireland, is the Leader of the House aware that at the present moment in Belfast rumours are circulating to the effect that the Northern Ireland Cabinet has completely rejected the package offered by the United Kingdom Government, and that there is a good deal of fear, uncertainty and rumour in Northern Ireland which could lead to communal violence and disturbances over the coming week end? Is the right hon. Gentleman aware, further, that the only way that this possibility can be prevented is for those fears and suspicions to be removed, and that they can be removed only by a very quick policy statement from his Government? If there is trouble over the weekend due to people's fears and uncertainties, responsibility will rest fairly and squarely on the shoulders of the right hon. Gentleman's Government.

Mr. Whitelaw: I think I can best serve this House, this country and the community in Northern Ireland by being very careful not to be drawn into making any comment at all. Therefore, I simply say that I have nothing to add to what I said to the Leader of the Opposition; a statement will be made as soon as possible.

Mr. James Hamilton: Considering the very many representations which have been made to the Leader of the House to allow us to discuss the reform of local government in Scotland, and realising that all associations are discussing it whereas Members of Parliament have been denied the right to discuss it, will the right hon. Gentleman assure us that, if not before Easter, very shortly after Easter we shall have an opportunity to debate this matter in the House?

Mr. Whitelaw: I recognise the persistence with which right hon. and hon. Mem-

bers representing Scottish constituencies have put this point to me. I recognise also that they certainly have a case and that the matter should be debated. However, I cannot say that I shall be able to offer time in the near future. But I note sympathetically the hon. Gentleman's request.

Mrs. Shirley Williams: Referring again to the recent police raids, will the Leader of the House consider stepping up the level of representations to his right hon. Friend the Home Secretary? While the Opposition agree that it is crucial that the perpetrators of the Aldershot outrage should be brought to book, it is not a crime to belong to the International Socialist movement and to express those views. We on this side of the House are concerned that an avoidable muddle between the two positions may be arising.

Mr. Whitelaw: There is no need for any particular level of communication between me and my right hon. Friend the Home Secretary, since he is sitting beside me and has heard what has been said.

Mr. Atkinson: Will the right hon. Gentleman clarify what he said earlier about a statement? Is he aware that there are some very well respected members of the Labour Party in my constituency, as well as members of my local authority, whose homes were raided at 6 o'clock that morning by members of the Special Branch, and that those people had never had anything to do with Irish politics—[Hon. Members: "How do you know?".] I know them personally. When the right hon. Gentleman talks about political investigations, he wants to investigate the past records of some of his hon. Friends—[Interruption.] They have much more to hide—[Interruption]—

Mr. Speaker: Order. Hon. Members must realise that if they make provocative noises they arouse that sort of comment. Mr. Atkinson.

Mr. Atkinson: They are likely to get much more than provocative noises from me—

Mr. Speaker: Order. I called the hon. Gentleman to ask a question.

Mr. Atkinson: I hope the Leader of the House will clarify the position when


he says that we shall have this statement as soon as possible, since there is concern on this side of the House about an infringement of our civil liberties, and, therefore, we ought to be able to debate the matter as soon as possible.

Mr. Whitelaw: Perhaps I should say to the hon. Gentleman that he will appreciate that I have not been conducting political investigations. I believe that he suggested at one moment that I had been. I do not think that there is any suggestion that I have been. But I have nothing to add to the clear statement that I made last week about the legal position. On that point, I must rest.

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [21st March].

Orders of the Day — AMENDMENT OF THE LAW

Motion made, and Question proposed, That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this resolution shall not authorise the making of—
(1) amendments of the enactments relating to purchase tax, other than amendments for or in connection with the abolition of the tax, and other than amendments making the same provision for chargeable goods of whatever description, or for all goods to which any of the several rates of tax at present applies; or
(2) amendments of the enactments relating to selective employment tax so as to give relief from tax—

(a) by way of exemption from, or a reduction in the rate of, tax except in respect of all persons of the same descriptions relevant for determining the rate of the employer's flat-rate contribution with which the tax is combined, whether that contribution is under the National Insurance Acts or under the corresponding enactments in Northern Ireland; or
(b) by way of providing for payments to employers of an amount equal to the whole or a specified part of the tax paid if the proposed provision—
(i) is in respect of employers in, or at establishments in, part only of Great Britain; or
(ii) extends to employers in, or at establishments in, Northern Ireland; or
(iii) is in respect of all persons in any particular description of employment in all parts of Great Britain, and relief in respect of the whole of the tax paid could be given in respect of that description of employment by an order under section 9(1)(a) of the Selective Employment Payments Act 1966 adding that description of employment to the employments to which section 1 or 2 of that Act applies; or

(c) by adding or removing any employer to or from the employers to whom section 3 of that Act applies, or
(d) by amending the provisions of Schedule 1 or Schedule 2 to that Act.

Question again proposed.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

3.48 p.m.

The Secretary of State for the Environment (Mr. Peter Walker): We have now seen two major Budgets of my right hon. Friend the Chancellor of the Exchequer. Both sides of the House have paid tribute to the extent of the reforms in the fiscal system that my right hon. Friend has introduced. I think it is also the judgment of both sides of the House that we are now likely to enjoy a period of very substantial growth in the economy. In spite of the criticisms made by the Deputy Leader of the Opposition and other hon. Members opposite, none of them so far has questioned the fact that we are likely now to enjoy a period of considerable growth. The extent to which it will be sustained is a matter of controversy between hon. Members. Certainly the indications are that this country is in a position to enjoy a greater degree of commercial success than at any time in the last 20 years.
There are a number of factors which give this country a fundamental advantage in terms of pursuing considerable economic growth at the present time. First, the extension of opportunities created by the wider European Community, and, secondly, within that Community the world wide financial mechanism of the City of London will be able to produce even better results than in the past in terms of our invisible earnings. These are fundamental advantages which we enjoy.
But, alas, as a country we have certain fundamental disadvantages. One is that, due to the advance of history, we have a greater volume of old factories and industrial plant than many of our major competitors, particularly those whose industries were destroyed in the war and have been completely modernised and replaced.
As a matter of geographical fact, we have a number of major regions in the country which, due to old industries going into decline, have serious social, unemployment and economic problems.
We also have difficulties in terms of having a mixed economy. I think that both sides of the House have tended in recent years in the battle of free enter-

prise and nationalisation to fail to give sufficient attention to what is needed if we are to have a successful mixed economy. Few hon. Members of the Labour Party advocate the disappearance of free enterprise as an economic system. They accept the importance of having a mixed economy. Certainly we on this side of the House accept that the nationalised industries are here to stay and that it is important to see that they are as successful as possible.
However, I wonder about the degree to which the Opposition have failed to take a fundamental look at the future of a free enterprise system in terms of the relationship between proprietorship and management. I was sorry when the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), a former Chancellor of the Exchequer, in his speech yesterday came out with the quite standard condemnation of things like stock options and the allowance of overdraft interest charges for taxation, because a number of articles which he has written and speeches which he has made over the last two years in Opposition made me feel that he, too, was concerned about the future relationship between management and proprietorship.
One reason why I welcome my right hon. Friend's proposals in these spheres is that these are two instruments which may provide the means of making a considerable shift from the old-fashioned proprietorship to new management. If so, I should have thought that both sides of the House would find it desirable. Unless we find ways whereby the rewards of a successful free enterprise system are not given just to the institutional and wealthy investors, but are more widely spread, I do not believe that we shall succeed in having the vigorous free enterprise system which I pressume both sides of the House would like to see.
There is no doubt that we have the basic background for growth. I was slightly concerned at the new dictum outlined by the former Chancellor of the Exchequer in his television broadcast last night, which seemed to suggest that the only method of getting large tax reductions is first to have economic failure. If that dictum were basically true, six years of the previous Government measured by economic failure should have meant enormous tax reductions throughout. But, alas, that was not the case.

Mr. Roy Jenkins: Does the right hon. Gentleman regard the past year as having been one of economic success?

Mr. Walker: Certainly I regard as successful a year in which this country enjoyed the balance of payments position which we enjoyed and in which our export position improved. Certainly as far as economic growth is concerned, not only was it more successful than any year during the right hon. Gentleman's period as Chancellor of the Exchequer, but it was far more akin to forecasts which were made by successive Chancellors.
Concerning future growth, I believe that two potential dangers will become increasing factors in the debates which take place in this House. One is the effect of growth on the environment, on which there is considerable public debate. I believe that future Chancellors will give attention, for example, to the importance of future raw material supplies and the importance of encouraging recycling.
The other concerns the vital question of the objectives of growth. It is in this sphere that I disagree with the tone of the remarks made by the right hon. Member for Birmingham, Stechford both in his speech yesterday and in his television broadcast last night.
I see the importance of growth in the coming decades as the ability it gives this country to improve its social and environmental policies. During six years of Labour Government we had high, increasing taxes with very little benefit in social purpose. Certainly we had a situation where at the end of the Labour Government, as the right hon. Gentleman well knows, their own supporters were very critical indeed of their failure in six years to meet some of the worst problems of poverty. Indeed, the Fabian Society considered it necessary to publish a complete book of essays highly critical of the failure of the last Government to tackle many of the social problems which existed.
In fairness to the speech made by the right hon. Member for Birmingham, Stechford in Lancashire a fortnight ago, described by commentators as a bid for the leadership of his party, if one reads the full text it is clear that it was more an apology for failures of the past than any bid for the leadership of his party.
At the beginning of his speech the right hon. Gentleman said:
Just because it could be avoided, the poverty of the old, the widows, the deserted, the low paid, the large families of this country are a greater reproach to Mr. Heath, or indeed to myself, who was a Minister in a recent Government…".
I certainly agree with the confession and condemnation of the failure to achieve very much social purpose in the period when the right hon. Gentleman was Chancellor of the Exchequer. He knows—indeed, he cited some in the remainder of his speech—that there were some very bad cases of poverty at the end of his period with which the previous Government took little action to deal.
For example, there was a moving passage in his speech where he described how he visited a constituent, a lady aged about 50 whose husband had left her in 1966 and paid her a maintenance allowance of £5 a week. He then stated that she received an income of £8·42 from outside work, that her tax deduction was £2·20, that her fares were £1 a week and that when she recently had an increase of 55p it was immediately taken off her rent rebate. I hope that the right hon. Gentleman will write a letter to that constituent, because he concluded that passage in his speech by saying how difficult it was to help her. I know how pleased he will be that in his Budget my right hon. Friend has helped that constituent. Perhaps the right hon. Gentleman will write to that lady and say that whereas when he was Chancellor she was taxed at £2·19, now that there is a Conservative Chancellor she will be taxed at only £1·05. There is a considerable difference in the position. Perhaps he will also go on to say that under the rent proposals which we are bringing in there is a national rebate scheme which provides that if she gets an increase in her income only a small proportion of the rebate will be affected.
The right hon. Gentleman has concentrated his attack on the Budget in other spheres. He said that in the Budget changes which have taken place no great benefit will be given to those who do not pay tax. Indeed, a considerable benefit was given to those who do not pay tax compared with what he did as Chancellor. He brought in a whole series of measures which had very adverse


effects on people who did not pay any tax. I do not believe that £270 million of extra S.E.T., £310 million of extra purchase tax, £140 million on tobacco, £100 million on beer, and £260 million on petrol tax imposed by the right hon. Gentleman was of particular help to those on low incomes. When the right hon. Gentleman put those penalties on this group of people he did it on the basis of providing nothing for the large family with a low income, contrary to what my right hon. Friend has done with the family income supplement.
When the right hon. Gentleman was Chancellor the Labour Government agreed to 1,200,000 tenants going over to fair rents, but they provided them with no rent rebate scheme. This is indicative of the difference in attitude between the parties.
As for the right hon. Gentleman's remarks yesterday about the pension increases being rather mean, and his demand that more should have been done, he is about the only former Chancellor who has no right to speak on this topic. The increase which he introduced in November, 1969, was the only pension increase of all increases between 1951 and the present day which did not make up for the rise in the cost of living that had taken place before the last increase. His increase averaged 5 per cent. per annum, whereas the increases by my right hon. Friend have been 11 per cent. and 12½ per cent. This contrasts the difference for the pensioner between the two Chancellors.
Hon. Gentlemen opposite really failed to tackle the various pockets of poverty. In his Lancashire speech the right hon. Member for Stechford cited one of his constituents. I would like to tell him about a number of others in his constituency who are in a rather different position today compared with when he was Chancellor. For example, in his constituency there are about 300 people over the age of 80 who are now receiving pensions but were refused pensions when he was Chancellor. There are another 600 of his constituents who, when the right hon. Gentleman was Chancellor, although they suffered from chronic sickness, obtained no allowance whatever but are now getting allowances of up to £5 a week.
Another 150 of the right hon. Gentleman's constituents who were seriously disabled when he was Chancellor—at that time there was not even the suggestion that anything would be done to provide them with attendance allowances—are, as a result of measures introduced by the Conservatives, getting £5·40 in attendance allowance because they are seriously disabled.
Another 500 of the right hon. Gentleman's constituents who are less seriously disabled are now getting £3·60, and 200 widows in his constituency between the ages of 40 and 50 who received no pension under Labour are receiving pensions under the Conservatives. About 190 families on low incomes with children who received absolutely nothing under the Labour Government are now getting up to £4 under us.
This catalogue shows that, in total, in the constituency of the right hon. Member for Stechford there are 2,000 aged, disabled and poverty-stricken people whom the Conservatives have helped but whom the right hon. Gentleman refused to help. I hope, therefore, that we shall not have long speeches from the right hon. Gentleman and his colleagues about the social purpose of a future Labour Government, particularly bearing in mind how the last one failed so miserably when they had an opportunity to do something for this group of people.
If our record in terms of helping some of the worst areas of poverty is very much better than anything done during six years of Labour rule, then the same applies to the dramatic change that has taken place as a result of the co-operation that my right hon. Friend the Chancellor has given to my Department in doing far more for the very bad areas of environment in this country.
After two years of Conservative Government we have available for the older industrial areas—the development and new intermediate areas—four major grants which combine to make the biggest impact on bad environment not only that this country but, I believe, any other country has ever witnessed.
At the present time it is possible in any of these areas to obtain a 75 per cent. or 85 per cent. grant for the clearance of derelict land; a 75 per cent. to 85 per


cent. grant for the removal of environmental eyesores under Operation Eyesore; a 75 per cent. grant for house improvements; and a 75 per cent. grant for the clearance of slums.
These are four major grants which together result in a massive injection of capital to transform the worst areas of our environment. Of those four grants, two are completely new and have been created by this Government, one has been increased by half as much again over what the Labour Government provided, and the other has been completely reactivated by us. This is a considerable change compared with what was taking place.
Let us consider, first, the whole sphere of derelict land. In 1971 in Lancashire the amount of derelict land being tackled trebled, in Durham it nearly doubled, while in Derbyshire it more than doubled. We shall be clearing twice as much derelict land this year compared with the amount cleared in the last year of the Labour Government.
Operation Eyesore was announced and launched by me as recently as 7th February. This is a scheme under which the Government pay a 75 per cent. to 85 per cent. grant in the development, intermediate and derelict land areas. This grant is designed for land clearance, tree-planting, clearing up ugly eyesores, many of which have existed for decades, and similar activities.
In only six weeks the response has been massive. In the Northern Region 12 schemes have already been approved. More important, 71 schemes are already being processed and are likely to be approved in the future. Countless inquiries have been received, and my regional offices are discussing a substantial programme for Durham and Cumberland County Councils. In Yorkshire and Humberside 68 schemes have already been approved, with 41 under consideration. There are many others, for Leeds, Bradford, Shipley and elsewhere.
In the North-West many inquiries are coming forward, and it was reported last week that Liverpool is contemplating spending nearly £1 million on schemes under this operation. Dirty buildings are being cleaned up, urban landscapes are being improved, derelict canals are being renovated and generally the degree of

activity is at a pace we have never before witnessed in this country.
As for the improvement of older houses, the Government's success has been a remarkable achievement. In the second half of last year we were improving twice as many old houses as were being improved in a similar period when the right hon. Member for Stechford was Chancellor. As for the development areas, I remind the House that as a result of the measures announced yesterday by my right hon. Friend the Secretary of State for Trade and Industry many cities such as Manchester and Leeds will now have available to them 75 per cent. grants— the present Government have made these available—and these will mean a further massive increase in the number of homes to be improved.
In the second half of last year, compared with the first half, in the development areas the number of improvement grants approved increased by no less than 75 per cent. The same story is true of slum clearance. Under the right hon. Member for Stechford, with his great interest in social problems and poverty, month by month the slum-clearance programme steadily declined. It is at last beginning to increase again. Many people who are suffering from homelessness will remember that it was the right hon. Gentleman who announced the final ending of the target of the Labour Government to build 500,000 houses a year.
The derelict land subsidy, Operation Eyesore and house improvements are but part of our general achievement. Perhaps even more important in terms of total impact for the coming period has been the decision of the Government to increase infrastructure improvements. When I heard the right hon. Member for Stechford speak yesterday about items of public expenditure to remove urban squalor, I thought that that was remark able coming from him. I remind hon. Members that when he was Chancellor there was rising unemployment in the region—[Interruption.] There was unemployment in the North-East and the North-West, and the situation was deteriorating.
It is true that the right hon. Gentleman brought forward some infrastructure schemes. We have brought forward


and approved schemes worth £164 million. In the whole period when the right hon. Gentleman was Chancellor he brought forward schemes to the value of £16 million. In other words, under this Government 10 times as much is being done in terms of extra infrastructure as the right hon. Gentleman considered necessary.

Mr. Roy Jenkins: Would the right hon. Gentleman care to explain what effect that has had on unemployment compared with the position at the time to which he is referring?

Mr. Walker: Yes, I will; ten times the effect that £16 million would have.

Mr. Jenkins: Therefore, as the right hon. Gentleman specifically mentioned Scotland, the North-West and the Northern Region, will he give the unemployment figures for at least one of those areas—in, say, 1969—compared with those of today?

Mr. Walker: I will give, for example, the very great increase in today's employment figures. [Interruption.] I will give the fact that the employment figures just published show 3,000 more vacancies for construction workers than at the same time last year. This is an illustration that, whereas the right hon. Gentleman allowed unemployment in the regions to rise and made a pathetic effort to increase infrastructure investment, this Government have made major efforts which will have an effect.
In all this expenditure I believe that further progress can be made in improving the environment. Besides the measures which I have mentioned, the Government have announced a massive programme to clean up rivers, concentrating on great rivers which flow through cities and towns such as the Tyne, the Tees and the Mersey. We have announced a new scheme next year for much more urban landscaping to be done than ever before. I am pleased to tell the House that we have reviewed the situation about general improvement of houses. In the general improvement areas, besides all the grants for improving older houses, there is a grant for environmental improvements which cost up to £100 per house.
If we take a specific area where 500 houses have been designated for im-

provement there is available a grant by which the Government meet 50 per cent. of the loan charges, thereby providing in total £50,000 in such a district, for environmental improvement and landscaping of the whole area. Where 2,500 houses are involved, this would mean on the present basis £250,000 for such improvements. I am today publishing an order to double this grant so that in future local authorities which wish to designate improvement areas will be helped on a very substantial scale. We have designated 318 general improvement areas, and additional grants will be made available too for those which have already been improved. I believe that the massive increase in this form of grant will result in very substantial help being given to local government. Here is another way in which the environmental purposes of this Government's strategies are helping in this problem.
In our approach to the environment we have endeavoured in the first two years under the new Department of the Environment to make a switch of resources to bad areas. We have also endeavoured to plan for the future approach to environmental problems. By the end of this Session major legislation concerning local government will have been completed. Reorganisation of housing finance will have been completed. The system of monitoring pollution in all its forms will have reached a considerable degree of accuracy, and a more positive approach to planning will be well on the way. I believe that the next and most important step for my Department is to bring about a total approach to the urban problem.
In the past the attitude has been a series of fragmented decisions not properly co-ordinated and not bringing about the improvement of urban areas which is necessary. In the last 12 months my Department has been very busily engaged in looking at this problem world wide to bring a more total approach to it. In addition, I intend in the next few weeks, with the co-operation of local authorities, to designate six towns and inner city areas where a group from my Department and local government will examine the total resources needed completely to transform such areas. The working group in each of these six towns will be headed by one of the Ministers from my Department, including myself.


In this way we can bring to the attention of local government and my Department the need for a much more total approach to make really remarkable progress in the areas concerned.

Mr. J. Grimond: I am interested in what the right hon. Gentleman is saying, but could he say whether this is an extension of existing schemes in certain towns which are being looked at, or is it a new scheme? Will these towns be additional to what is already being done?

Mr. Walker: This will be a new scheme bringing in a whole host of disciplines which I do not think have been available up to now. It will bring in, for example, a total approach to transportation problems. It is a new scheme to find all that is needed.

Mr. Nicholas Scott: My right hon. Friend referred to towns. May I express the hope that the claims of inner London will not be forgotten?

Mr. Walker: I said towns and inner city areas. We shall make a major approach in big towns and cities on this problem.
On transportation, my right hon. Friend the Secretary of State for Trade and Industry has announced certain actions which we are taking to improve the road system in our drive to enter Europe. A few months ago I announced major road programmes to be undertaken between now and the end of the decade. Next week my right hon. Friend the Minister for Local Government and Development will be outlining principal road schemes in urban areas with a potential of about £600 million expenditure for that programme.
In those schemes it is vital to take a new look at the whole transportation problem. At present there is a whole range of grants. We are spending £200 million on principal roads, £170 million on local roads, £110 million on such things as car parks, infrastructure grants, rural bus services and highway administration, and £30 million on support for services in other areas. Hitherto the practice has been to treat these fields of activity as self-contained and related to specific projects. I believe that such an

approach does not satisfy the need to tackle problems of land use and comprehensive planning. I intend to discuss this with the local authority associations so that relevant policies can be weighed in terms of infrastructure and management. The new counties will have to produce comprehensive plans to justify expenditure not only for one scheme or another for road provision and restraint measures, but for infrastructure for public transport. In other words, I want to see how our total expenditure can best be used to solve the problems of movement in a satisfactory way.
These proposals, I believe, indicate that the Department of the Environment possesses the powers and financial resources to lead the world in bringing about a total approach to environmental problems. I look on the great challenge of this Budget not just as a commercial success, which I believe my right hon. Friend will bring about, but as one to enable this country to use its resources for a much better quality of living for all our citizens. In the social policies so successfully pursued by the Secretary of State for the Social Services and the economic policies pursued by the Chancellor in combination with this positive and total approach to the environment, this Budget is an historic one in every sense of the word.

4.19 p.m.

Mr. Anthony Wedgwood Benn: I hope that the Secretary of State will excuse me if I do not follow him in detail in all he said. We are developing a pattern of debate which allows 24 hours to elapse before a comment is made, so I want to devote much of what I want to say to the speech of the Secretary of State for Trade and Industry yesterday. However, I had expected that the Secretary of State for the Environment would have given the House some supplementary information about the extent to which his own Department would be involved in the new Industrial Development Executive, announced by his right hon. Friend yesterday. This gap will have to be filled in the end. Incidentally, if last year is by the right hon. Gentleman's definition a "successful" year for the Government, I tremble to think what their first failure may be like.
The third day of this debate has been dominated, if the Secretary of State will forgive me, not by his speech but by the unemployment figures published just before lunch, showing an increase of 1,100 in the numbers wholly unemployed, against a normal seasonal expectation of a 13,200 fall. The figure now stands at 3·9 per cent., representing, seasonally adjusted, a further increase of over 14,000 people. Although vacancies have increased this month again, seasonally adjusted, they have increased only by 500.
Anyone looking at the figures and at the traditional regional breakdown between one area and another, with the heavy emphasis on male unemployment and the usual problems about elderly male workers, will realise that, exactly as my right hon. Friend the Leader of the Opposition predicted, the euphoria engendered by the Chancellor on Tuesday has largely evaporated by this afternoon. The announcements of the Secretary of State yesterday can now be tested against the magnitude of the task confronting this country in bringing down unemployment to acceptable levels.
For most people, the key element in their environment is their capacity to find employment and to work so that they can safeguard the interests of their own families. But the figures today confirm the error of judgment made by the Chancellor last year, to which my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) referred yesterday.
Certainly the Secretary of State for Trade and Industry misjudged the gravity of the situation last year. I find in my study of his speeches that last year he rebuked Vic Feather for forecasting that there would be 1 million unemployed at all. Therefore, his own contribution to economic forecasting has not been particularly notable.
Whatever the Budget may do to reduce unemployment, whatever the various forecasts which have been made, no Minister has been able to give a firm forecast of the date by which the figure of unemployment would fall to the level at which it was when they came into office. If general reflation will not do it, then the other measures introduced or announced yesterday by the Secretary of State will, clearly, be necessary.
I would make one additional comment to what the Chancellor said about the Budget and the effect that it might have on trade union wage claims. He tried to suggest that because of his Budget generosity there would be no reason, or no need, for the trade unions to make further wage claims. If most trade unions had their general secretary in the Treasury doing for them what the right hon. Gentleman has done for those sections of the community which are broadly better off, there might not be a need for the trade union movement.
But figures of earnings of manual workers from January, 1971, to January, 1972, showed an increase of only 8·7 per cent. against a price increase of 8·2 per cent. Thus, during this period, particularly if unemployment is added into the equation, manual workers as a whole actually had no overall increase in their standard of living.
However, it is, of course, to the announcement of the Secretary of State yesterday that I want to turn my attention. I am sorry that he is not here for this debate. I told him that I should be referring to his speech, and I wish that he were here to participate. The right hon. Gentleman was evidently rather put out by the reception accorded his speech yesterday afternoon. I assure both the Chancellor and by proxy, his right hon. Friend, that the laughter was directed not against the measures, which we shall study with great care, but, I am afraid, against the right hon. Gentleman himself, who consistently throughout his period in office has denounced measures very similar to the ones that he has now introduced—Interruption.] I will come to that. I would not have said that if I were not in a position entirely to confirm what I said. Indeed, there were moments yesterday, when the right hon. Gentleman talked about rapid economic and industrial change, when I thought that we should hear from him about the white heat of the technological revolution.
It was a speech in which the Secreretary of State tried to persuade the Opposition that the policies which he was producing were in some way novel, when in fact he will be remembered, alas, for having dismantled the apparatus which had been so painfully assembled to deal with problems which he chose to ignore. The right hon. Gentleman has no excuse for this. As Director-General of the


Confederation of British Industry, as a member of the National Economic Development Council before the change of Government, he, better than any other member on the Government Front Bench, knew the reality of the problems facing this country, Government and the regions. He has now come forward with a reversal of previous policies.
The first example is investment grants. One can choose another word if one finds it embarrassing to use the title "investment grants", but as far back as May 1966, the Secretary of State was criticising investment grants. He produced a White Paper in October, 1970, in which he spelled out the case against investment grants. Now they are to come back—[Interruption.] Of course they are grants for investment—

The Financial Secretary to the Treasury (Mr. Patrick Jenkin): They are entirely different.

Mr. Benn: The hon. Member may say that, but they are grants paid by the Government to those who invest. We in the Opposition look forward to the continuation of the regional employment premium, which we believe also had a key part to play.

Mr. Jenkin: Before the right hon. Gentleman moves away from grants, would he be prepared to answer this question? Whereas the combined effect of the new incentives in the development areas which were announced on Tuesday and Wednesday is a differential of three times as much between their value to the profitable company and their value to the unprofitable company, would he tell the House what the differential was with his scheme?

Mr. Benn: The hon. Gentleman is simply not dealing with the point I made. That was that we had a well-established system of investment grants, which could have been adjusted to create any differential that the Government wished, and the Government discontinued them as part of their public expenditure saving in October, 1970. They have reversed that policy. The question that the hon. Member has to answer is how many jobs have been lost in the intervening period as a result of their foolhardy decision to abandon investment grants before they

have had a chance to do a survey of regional policy.
Take shipbuilding, for example. No policy of the previous Government of support for any industry was more relentlessly criticised by the right hon. Gentleman than that towards shipbuilding. Indeed, the notorious Ridley Report, which has been published, advised that there should be no more money whatsoever made available to Upper Clyde Shipbuilders. Last summer U.C.S. wanted £6 million. Now, six to eight months later, £35 million is to go into Govan Shipbuilders, and probably—although this is not finalised—another £12 million into Clydebank, making £47 million in all.
Did the Secretary of State, speaking yesterday, seriously expect the House to believe that the policy which he had brought forward was the same policy as that on which he made his reputation? Last December the Shipbuilding Industry Board was wound up. Yesterday the right hon. Gentleman announced £50 million of production grants for British shipbuilding—no supervision, no accountability, a straight subsidy. In fact, this is far less than the industry itself had thought necessary in its own submissions, but it is is still an enormous subsidy to the shipbuilding industry. There were no new facts which had come to light since the Shipbuilding Industry Board was wound up.
The Minister has done the same with machine tools. The last Government developed major programmes to support the machine tool industry, but as a result of the collapse of economic confidence in the past year the machine tool industry suffered a 32 per cent. fall in orders, and, although in the House my hon. Friend the Member for Coventry, North (Mr. Edelman) and others continually came forward and appealed for some help for the machine tool industry, it was only yesterday that the £10 million programme was brought forward. We are now awaiting a programme of between £5 and £50 million for the computer industry. Support of £1½ to £2 million was announced only on Monday of this week for the hovercraft industry.
As far as Rolls-Royce is concerned, this is a story of its own. The Government have ended up by funding the Rolls-Royce company on a basis much more


comparable to the funding of the Concorde project, of which the Government have decided to underwrite the whole cost. The Prime Minister abolished the Ministry of Technology which was responsible for supporting shipbuilding, computers and machine tools. Yesterday the right hon. Gentleman announced a Ministry of Industrial Development responsible for supporting shipbuilding, computers and machine tools. There is no doubt that a study of the right hon. Gentleman's speeches over the year and a half that he has been in office indicates that the Government themselves have condemned by their own announcements the policy which they have pursued since they have been in office.
I wish to make two general comments. First, in the intervening period enormous and quite unnecessary damage has been done to the structure of our own industry by the policy pursued by the Government, and far more public money is now necessary in certain projects, two of which I have mentioned, than would have been necessary if the Government had pursued a consistent policy in this matter. My second comment is that in the light of the right hon. Gentleman's own contribution to the debate about relations between Government and industry—his speeches being a treasury of boasts, bluffs, brave words and climbdowns—it is quite reasonable for the Opposition to be sceptical about the meaning of the proposals which he announced yesterday.
I want to move now to some general comments on the announcement that was made. I would say first that I personally believe it is a very good thing for Parliament that Governments change their mind. I think that one of the things that do most damage to Parliament is when people suppose that representations they make to Parliament have no effect at all. This is a comment which is contrary to what one sometimes would be led to believe in reading things in the Press. The Press tend to favour, or to appear to favour, the Minister who can be proved never to have changed his mind, and when people protest or argue with Governments the comment is often made that it is a "futile gesture", a "hopeless mission", the Government will "stand firm". In reality, however, debate and argument do shift opinion, and it is very important that people outside should

know that debate and argument shift Government policy.
It is important for the survival of this House that when men come to see a Minister and then sit in the Gallery to watch us they should not feel that their representations are destined to fail. I like to see the argument flow across the Floor of the House one way and the other, and I like to see Ministers responding to real needs. But the Government Front Bench would have a lot more credibility if they recognised that this is the process which came to fruition yesterday instead of pretending that, in fact, they are presenting the same policy they have always pursued. It is as if President Nixon had gone to Peking and had tried to persuade them that John Foster Dulles had always wanted to be friendly with the Chinese. Nobody would have taken him seriously. Thus, we think that Ministers, in the context of parliamentary debate, should respond to the interests of the public amplified by hon. Members in debate.
I also believe that what has happened reveals a weakness of a system of government which allows Oppositions, with maximum energy and minimum knowledge, to develop policies without having had the opportunity of knowing in advance what a very high price would be paid for implementing what they have in mind. I am absolutely certain that if in 1970 the Government had known what they now know about the problems that concern them, these policies would have developed out of policies introduced by the previous Government and we would not have had the break that we had in these past two years. There is no doubt about it that there will be an entire year or two's gap before the new policies can be effective, because one cannot introduce a new policy and new machinery and expect them to have an immediate effect.
I have heard it argued and have been somewhat attracted by the idea that perhaps a department of the Opposition to keep the Opposition informed about the realities of Government would be helpful to the development of some continuity of instruments, if not of policy, which in the case of industry would be most advantageous. It was highly significant that in his speech the Chancellor—a man normally expected to be in purdah


before announcing his decisions—felt it necessary to announce decisions which would take effect a year ahead because of the computer implications of those policies. Industry requires some measure of security in knowing with what instruments of government it will be dealing.
I turn now to the proposals themselves. I was interested in the intervention of the Minister a moment ago. I would say first of all that we are anxious to be persuaded that the effects of these new measures are going to be to maintain fully the regional differential.

Mr. Patrick Jenkin: Mr. Patrick Jenkin rose—

Mr. Benn: The hon. Gentleman has intervened already to make his point, which I understood was that the new measures would be three times as effective in their regional differentiation. If I have not understood him correctly, perhaps I could finish my point and then he can intervene again.
With free depreciation nationwide and an expansion of assisted areas, we certainly want to be satisfied that the effect of the Government's measures is not to narrow the differential between the development areas and the rest, given that this will all be done against the very strong pull of Europe, which will make the Midlands and the South-East even more attractive, particularly with the change in the I.D.C. limits, which causes great anxiety.

Mr. Patrick Jenkin: I intervened earlier only very briefly and perhaps the right hon. Gentleman did not quite take my point. I was drawing the distinction between his grant system and ours. His made no differentiation between the profitable and the unprofitable firm, and that was always our main accusation. Ours, with a combination of free depreciation and the new grant, means that the combined system is three times as valuable to the profitable firm in the developed areas as to the unprofitable firm. On the regional point, I can assure the right hon. Gentleman that on a discounted basis, which the hon. Member for Heywood and Royton (Mr. Joel Barnett) is always advising us to use, it is more valuable than anything that existed during the Opposition's six years in office.

Mr. Benn: The Minister still has not met the point that grants, by definition, are not linked only to profitable enterprises. I was talking not about the combination but about the reintroduction of cash grants. Secondly, the new grants are not related to employment creation, and if there was a criticism of our scheme—Dr. Jeremy Bray, a former Member used to make it in the House—it was that it did not necessarily lead to job creation, and this is even truer of the present scheme.
The second point of substance I want to raise concerns my doubts about the executive being inside government instead of in a separate agency. The Prime Minister today when answering questions said that this was the best way of doing it. Certainly the indications given to the Press before the last election were that this Government intended to hive off agencies of this kind from Government. My own view is—and we shall have debates about this when the Bill comes forward—that the Government machinery is too slow and centralised and it would be better for the Cabinet to decide objectives and Parliament to vote the money, and then to let the execution be done in an environment of rather greater freedom. The accountability of a Government Minister in sensitive areas involving investment in industry is an absolute illusion, because no Minister will describe sensitive commercial arrangements that have been reached with companies, whether that is done by the Shipbuiding Industry Board, by the I.R.C., or by the Minister. But even if that were the agency chosen, the Industrial Expansion Act provided exactly that instrument in which Governments were able to act themselves without going outside.
My third doubt is about the degree of centralisation which is implicit in having it embodied in the Department of Trade and Industry. Regional offices have existed for a very long time, but there is no doubt that the development authorities, as recommended by the T.U.C., which delvolve executive responsibility to certain areas, based rather on the model of the new towns, merit a great deal more consideration than has been given to them in the past.
Another point, which also emerged very clearly from the right hon. Gentleman's speech yesterday, is that as Secretary of State for Trade and Industry


he finds himself incapable in any speech he makes of referring to the trade unions as an agency for improving the industry in which they earn their livelihood. Every reference to a trade union, if we have one at all—with one notable exception of a tribute to Dan McGarvey over Govan Shipbuilders—is always to warn them off performing their function of defending their members, and never to see them as part of the industrial scene whose advice needs to be sought and whose help can be so important.
I come now to what is the most central aspect of the Government's new proposals, and that is the rôle of public money for private industry. It is very questionable whether the subsidies which are now to be introduced on such a massive scale represent the right way to handle this problem. When the right hon. Gentleman the Secretary of State for Trade and Industry gave evidence to the Select Committee the other day, I understood him to say that he did not have clear criteria for support. The problems of selectivity are real. There is a genuine conflict between managerial responsibility and public accountability. There is a problem of the public interest, which is not met simply by inviting the Bank of England to get the institutional investors to resuscitate the shareholders to play a larger rôle in management. The shareholders' interest is and must be in the profitability of their company. There is a public interest that has to be safeguarded in this area of co-operation between Government and industry.
When we speak about measures of the kind that the right hon. Gentleman introduced yesterday, we are speaking about social responsibility and about regional and employment policy. It is quite wrong that unlimited subsidy of this kind should be given without looking again at the case for public ownership in this whole area we are discussing. With the Government's nationalisation of Rolls-Royce and the public ownership of Upper Clyde Shipbuilders—for it is clear that there is to be no private shareholding in it; the Secretary of State for Trade and Industry, indeed, urged that and admitted that he would not recommend anyone to invest in Upper Clyde—we are dealing with a situation where the case for public ownership is very strong indeed.
For example, with the amounts of public money now being poured into the

shipbuilding industry, £100 million and maybe more later, the case for public ownership of the industry is in my judgment unanswerable, as is that for the aircraft industry, where massive amounts of public money are available and are paid. The case for looking at the ownership of the firms is now urgent.
Finally, I turn to the framework within which the Chancellor set his Budget and the right hon. Gentleman the Secretary of State for Trade and Industry addressed the House. I am speaking now about the framework of European entry, to which both Ministers attached so much importance. Looking at that framework, we find that the policies which were announced by the Chancellor on Tuesday and by the Secretary of State for Trade and Industry yesterday will take effect, if entry is completed against the background of the progressive abolition of tariffs, trade arrangements becoming the responsibility not of the Minister but of the Commission, capital movements becoming progressively freer and regulated by the Commission, regional policy being subject to the Commission's control and a tax policy that will increasingly be harmonised. Indeed, looking back at the words of the Chancellor about variable exchange rates and setting them against the background of the talks between President Pompidou and the Prime Minister at Chequers over the weekend, there is not very much meaning in talking about "unrealistic exchange" rates if Britain's exchange rates are to be harnessed to those of the other Community countries. Far from giving us freedom for manoeuvre, which is what the Chancellor was suggesting, it may well do quite the opposite.
But the most significant comment on the European background to the Budget and the particular policies announced yesterday comes not from the Minister or the Front Bench but from the recent pamphlet published on this subject by Aims of Industry. If the House will bear with me, I should like to convey something of the philosophy of Aims of Industry's comment. It tells us that apart from a few months of "parliamentary scuffles"—that is the phrase—entry is as good as settled. The pamphlet reads:
Existing laws here which are at odds with Common Market practices will be scrapped.


The article continues:
The fundamental difference between the government of the United Kingdom and that of E.E.C. is that while legislation here is in general initiated by Parliament to be carried out by the Civil Service, in the Common Market the officials think up what needs to be done to further the Community's approach, and then submit measures to the politicians, who meet comparatively rarely.
That is the comment of Aims of Industry. The article comes to the logical conclusion that:
It will always, of course, be necessary for commerce and industry to put their point of view to the U.K.'s political rulers. But when it comes to matters within E.E.C.'s province, any steps taken on the limited, local scale of national politics only are bound to be less effective than if we made our voice heard in Europe.
The plain truth is that even the Minister's Bill, which he will present shortly to introduce his new economic policy, will be capable of being modified, scrapped or altered by the Commission, and there will be no effective parliamentary supervision of it.

Mr. Christopher Tugendhat: Will the right hon. Gentleman give way?

Mr. Benn: If the hon. Gentleman insists.

Mr. Tugendhat: The right hon. Gentleman has quoted Aims of Industry as his authority for the thesis he is developing. Has he always hitherto regarded Aims of Industry as a reliable source of information, or is he just taking it on this occasion as the source of truth and authority on the Common Market?

Mr. Benn: The hon. Gentleman misunderstands the purpose of my quotation. It was to give the House a view of this as seen by industry, not as seen by the Secretary of State for Trade and Industry. The Secretary of State presents one picture to the House, but Aims of Industry, representing the people who subscribe to that organisation, sees the position totally differently. It does not see the Minister's policies as being effective or the laws that he may get through the House as being permanent. It sees the real centre of power now as being Brussels, and sees that, in those circumstances, there is a diminution of political control. The reason I quoted that was

that far from achieving greater accountability by the statement made yesterday, the broad overall effect of the Government's policy, taking Europe into account, is greatly to diminish the degree of accountability of Parliament for key economic issues. That is the background against which we see the Government's policies developing.
I would like to reiterate what I said right at the beginning; namely, that yesterday, when we listened to the Secretary of State, we were not mocking his policies because we recognised the magnitude of the task to which they are directed. We find in them at any rate some echo of policies and instruments which we developed, which should never have been scrapped, which are now to be reintroduced, and which we desperately want to succeed.
In our study of the policies, we shall judge them, as indeed the Budget will be judged, by the extent to which they make inroads into the totally unacceptable level of unemployment for which, on the most generous estimate, the Government must bear a major part of the responsibility.

4.52 p.m.

Mr. John Boyd-Carpenter: It is the salutary if unwritten convention of this House that when it has been announced that an hon. Member will shortly be leaving it to take up an outside appointment he shall not indulge too violently in controversy. Conscious as I am of my own limitations—as Oscar Wilde said of himself, I can resist anything except temptation—I have not sought to catch your eye, Mr. Deputy Speaker, for some time.
At this moment, I feel some sympathy with the remark attributed to the late Lord Curzon. He once said to a friend that when he got up in the morning he got on his knees and offered up a prayer that during the course of the day he should not say anything harsh or unkind to any other person. He added that when he went to bed at night it was astonishing how often he found that this prayer had not been answered. Nonetheless, I have made some small contribution to Budget debates since the days of that much under-rated Chancellor, Dr. Dalton, and as I feel that that which my right hon. Friend introduced on Tuesday is a historic one, I hope that the House


will allow me to make a brief contribution. I am quite certain that this Budget will be a historic one in both the respects in which the Budget has to operate—both tax reform.
There is absolutely no difference between the two sides of the House as to what we want the economic effect of this Budget to be. We want to see an acceleration of growth and a large build-up of investment, so tackling unemployment on the only firm and certain basis. It is a matter of infinitely difficult judgment, but I would submit to the House that this massive addition to purchasing power, with its powerful emphasis on encouragement to investment, is really the best calculated instrument for this purpose that could be devised. There will be a very large additional volume of purchasing power released. There will be great encouragement to those in industry to invest. But I would say to the House, with respect, that there is nonetheless a limit to what a Budget or a Government alone can do. Boards of directors who take the actual decisions on how to invest their shareholders' money will not be lured into doing this—and ought not in their duty to their shareholders to be lured into doing this—by all the investment incentives in the world unless they have confidence that that investment has a reasonable chance of bringing in a substantial profit, a reasonable share of which profit their shareholders will retain. It is, therefore, of great importance—and this is the duty which falls almost equally on all of us on both sides of the House—that we should endeavour to help to build up that atmosphere of confidence without which the most ingeniously-devised incentives to investment will tend to fail in their purpose.
It is really vital that those who, in our still basically free enterprise society, take the multiplicity of commercial and investment decisions—the sum total of which amounts to the investment of the year—should do so against a background that Parliament as a whole is determined that we shall go into an age of growth and expansion and that Parliament is determined to do nothing to kill that rather tender plant of commercial and industrial confidence.
Therefore, I commend the measures to the House as being about the most that

any Government can do, but we ought not, as members of this House, to underrate our own responsibility for making sure that they are effective.
I was particularly delighted to hear my right hon. Friend's significant reference to the future, in this context, of exchange rates. To those who have studied the muted techniques which Chancellors of the Exchequer of any party always adopt on any subject which has any relationship whatever to the rate of exchange, I thought my right hon. Friend's comments not only relatively forthright but enormously encouraging.
The right hon. Gentleman opposite rather derided consistency. I will, nonetheless, claim consistency in this matter. In his book, the very much alive, but no longer in this House, Lord Butler of Saffron Warden, disclosed that as long ago as 1953 there was a strong movement in the Treasury to move to free exchange rates. After this lapse of time I do not think that I shall get involved in the Official Secrets Act if I disclose that I was at that time a strong exponent of a measure which I wished had been taken. I was delighted to hear my right hon. Friend go quite a long way in this direction.
One has only to look at the history of this country under all Governments or, indeed, at the history of most of the advanced countries of the free world in the last 25 years, to see how, again and again, industrial growth and rising national prosperity have been checked, industry kept back, and heavy taxation imposed, in order to try to maintain the pretence that a rate of exchange for the national currency which had been fixed many years ago, in totally different circumstances, was still a real one, when anyone who knew anything about the markets of the world knew that this was not its value in the markets of the world.
That pretence—and it goes back to what I have for many years believed to be the foolish decisions of wise men at Bretton Woods—has bedevilled the economic management not only of this country but a great many other countries in the years since the war, and has been a major contribution to the check in the economic growth of this and other countries which modern technological progress has made technically and physically possible.
I regarded those words in my right hon. Friend's speech as being of special significance. I do not want to weary the House with the general argument about a free and floating rate, and my right hon. Friend did not go so far as to indicate that he meant that. But he moved a good deal further in that direction that when he came back from Washington some months ago. In my submission, a free and floating rate is the perfect instrument for maintaining the balance of the national economy. If one exports too little and imports too much, under a free system the value of one's currency goes down, one's exports become cheaper and more competitive, and one's imports become dearer and less attractive. One tends to export more and import less. The currency adjusts and one gets again into equilibrium without all the accompanying and expensive borrowing, which fixed rates, backed, as the right hon. Member for Bristol, South-East (Mr. Benn) said, with enormous emotional devotion to a particular rate of exchange, involve. This has bedevilled economic management over 20 years. My right hon. Friend is the first Chancellor to make a reference to this matter in his speech. That alone would have made this Budget an historic one.
It is an historic one, too, in respect of tax management and tax arrangements. My right hon. Friend seems to have had greater success in making those powerful opponents to change—the revenue departments—more amenable to his will than any Chancellor of the Exchequer in my recollection. Lord Brook of Cumnor once said to me, when he was Chief Secretary to the Treasury, that one of these two Departments—I will not identify which—when he pointed out to them that a certain Measure had the unanimous support of the Cabinet, of the majority party of the day and of the House of Commons, did not only regard that state of affairs as not a conclusive argument, but did not even regard it as a factor to be taken into account. My right hon. Friend has quite plainly, with the aid no doubt of his own former professional training, persuaded them to do things which I would never have believed any Chancellor of the Exchequer could make them do. The result is a really magnificent set of proposals for tax reform.
There is the outline that my right hon. Friend has given us of what is not quite the negative income tax which my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) has advocated with such unfaltering faith for so many years but it is a remarkably constructive proposal. Some of us can imagine the official obstacles which must have had to be overcome to get the scheme as far as it has gone. But I was particularly glad that my right hon. Friend did not carry the proposals to the logical conclusion which some of its exponents do. In particular, he decided to leave in existence the Supplementary Benefits Commission though, as he said, it would have had much less to do. I am sure he is right. This kind of fiscal system is admirable for doing half the job of relieving poverty. It is an excellent and inoffensive method of imposing a means test because it is a means test that the overwhelming majority of people in the country have to undergo anyhow.
The greatest difficulty is in respect of people below the income tax level. My right hon. Friend has just increased that number by 2,750,000, and, of course, the system is quite useless to determine needs. The Supplementary Benefits Commission has to assess both means and needs. I will illustrate it in this way: take the typical, classic recipient of this benefit, the elderly widow. Two elderly widows, one in excellent health living in a well-kept home with younger relatives, and the other in poor health living alone in poor accommodation. The needs of these two ladies are vastly different and unless the devoted staff of the commission are kept in being there will be a system which will mathematically secure that incomes are wisely and fairly allocated but will not take account of the other half of the equation—the varying human needs of our variegated community.
May I also mention a significant proposal in this context? My right hon. Friend said the increases in national insurance benefits given this year would be free of tax for administrative reasons. But he must have appreciated that once having created this precedent it will be singularly difficult to apply tax in future at any rate to future increases. This leads to a very important point. When I was Minister of Pensions and National Insurance I firmly defended the taxation


of retirement pensions on the ground that the contributions were allowed against tax. The contributions are no longer allowed against tax, and in this way the argument for taxing the pension has been largely invalidated.
I know there is a classic argument that the person who would benefit most is the retirement pensioner in our universal system who also happens to be a millionaire. But once we get away from that rarified category, an enormous number of people deeply resent the payment of income tax on their national insurance benefits. Once again, I hope that my right hon. Friend has set an encouraging precedent, and I can assure him, though I will not be here to do so, that a number of hon. Members will probably interest themselves in this point in future years.
I want to deal with only two specific points of taxation itself. I am sorry that my right hon. Friend did not tackle what seems to me the evil of the capital gains tax. In an era of inflation a person can pay capital gains tax on selling something, be it a security or a chattel, which in real terms is worth less than he paid for it when he bought it. Because the capital gains tax is based on money values, in an era of inflation it can well be a tax on capital losses and it operates unfairly in this respect. I commend the American technique of phasing it out over a number of years, to try to take care of this inflationary problem. This is almost the only area of tax where my right hon. Friend has not introduced reforms, and I hope that this merely means that he is making an exception in order to have something to give away on the Committee stage of the Finance Bill, He must have something to give away. Having helped to conduct a number of Finance Bills I know that if one has nothing to give away one is in a most appallingly difficult situation!
I am very glad that my right hon. Friend has begun to tackle the problem that I raised on last year's Budget and last year's Finance Bill—that of estate duties. There is no doubt that as a result of inflation, rates of duty which might have been perfectly fair and reasonable when they were instituted have become alarmingly oppressive. This is a tax which hits people almost literally when they are down. It hits particularly hard on the widow, and I am delighted that

this year he has made some concession to the widow.
It still remains a fact that the Inland Revenue has had it both ways in respect of the levy of estate duty on bequests to widows. While a man and wife are alive they are treated for almost all tax purposes as one person, apart from the welcome exception made last year in respect of certain wives' earned incomes and surtax. As soon as one of them dies the Revenue reverses its position and says that there is a passing of the estate from one to other other.
In human terms—and it is the widow rather than the widower who is the normal case—it means that when a woman has just lost her husband's earnings, or the payment of his pension, that is the moment when, if she has a modest capital sum bequeathed to her, the Revenue descends upon it with a claim. There is a very strong case for saying—and I leave this thought with the House—that when the estate passes to a widow or widower it should not be treated as passing for estate duty purposes, but that, in death as in life, they should be treated as one and the liability for duty should arise when the survivor dies.
A Green Paper is being circulated and I have no doubt that it is my right hon. Friend's intention to consider the matter, although it will not help those who die this year. This year he has left a rather curious anomaly. I welcome the concession over bequests to charities—but has the House appreciated that if a man leaves his estate say, to a home for elderly pussy cats he can leave £50,000 free of tax, but if he leaves it to his wife he can leave only £15,000?

Mr. Patrick Jenkin: The figure is £30,000.

Mr. Boyd-Carpenter: If my right hon. Friend is adding the £15,000 to the £15,000 I must add the £15,000 to the £50,000 and make it £65,000. The comparable figures, taking in the free allowance if my right hon. Friend wishes—I want to be considerate this afternoon—are £30,000 and £65,000.
Our friends in Europe have always regarded our sentimentality about animals as rather comic, but if as a matter of public policy we are seriously to lay down that in social terms it is apparently


slightly more than twice as worthy to leave one's property to a cats' home than to one's widow, they will think that we are carrying our eccentricity to extremes. I welcome the help for charities, but I hope that in Committee someone will try to remedy this anomaly.
It is no answer to say that the whole matter will be looked at by a Select Committee on the Green Paper. I know that it will, but every year people are dying, every year the personal problems posed by estate duty on death arise, and I do not think it is very sensible to leave the matter in this quaintly anomalous, if highly British, position.
I do not want to detain the House very long, and therefore I pass over the many matters on which I should like to do nothing but applaud, such as the abolition of the voluntary restraint on investment in the developed countries of the sterling area, which is long overdue and extremely welcome, as are many of the tax changes.
What is most impressive is the grip that my right hon. Friend has taken on our whole system of taxation. This part of the Budget is closely related to the other. We shall always have to carry a substantial burden of taxation, but the way in which we carry the load is crucial to our economic activity. The easy analogy is a soldier's pack. If it is properly adjusted, he can carry with ease a load which, when the straps are badly adjusted, will weigh him down. That is true of the taxpayer. Therefore, my right hon. Friend's tax reform is not separate from but is part of the comprehensive whole of the Budget, modernising our tax structure for the present age.
I have not heard, in my time in the House, a Budget which seemed so ambitious, so comprehensive and so well thought-out an attempt to modernise tax arrangements, many of which, like the estate duty to which I referred, go back many years. So I believe we have before us a historic Budget which will point the way to a considerable advance for this country.
I have known a number of Chancellors. Without exception, they have been people of high ability and great devotion to their duty. But my right hon. Friend, who has, I think, many more good

Budgets in him, has produced two quite outstanding ones in the past two years. I hope that I shall be acquitted of presumption if I say that he is on the way to being a very great Chancellor, and that in due course he will achieve what I suppose all of us in public life would admit to be our ambition, in the words of Gray:
To scatter plenty o'er a smiling land,
And read their history in a nation's eyes.

5.14 p.m.

Mr. J. Grimond: Far be it from me to speed prematurely a departing Member. I had hoped the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) would linger into high summer, but I understand from the beginning of his speech that, no doubt owing to the warm spring, he is thinking of leaving his chrysalis on the back benches and spreading his wings for higher spheres, in two senses. If that is true, I must say how sad I am at the prospect of that event. I am sure that in that I speak for the whole House. [Hon. Members: "Hear, hear."]
The right hon. Gentleman has graced many benches in the House in different capacities. He has always adorned them and always enlightened the House, except when he did not want to. He is practically the only Member I can think of who on occasions is deliberately obscure, but never unintentionally.
The right hon. Gentleman lived up to his highest reputation this afternoon. I say that largely because I agree with most of what he said, but apart from that he demonstrated once again what a first-class debater he is. This is a debating Chamber, and we cannot afford to lose too many people of the quality in the House which the right hon. Gentleman has shown for so long. I have never understood why his Government let him go. I cannot believe the capacity of any Government is so great that they can forgo a man who on any subject is always a first-class debater. I wish him well in the stratosphere, or wherever he may be, and I hope his parting remarks will be taken notice of.
I do not think foreigners will be very surprised about the treatment of widows. They will say that that follows from the British view of women in general. But I wholly agree with the right hon. Gentleman's main points.
My right hon. Friend the Leader of the Liberal Party, the Member for Devon, North (Mr. Thorpe) dealt yesterday very effectively with the position of the lower-paid wage-earners and others whose incomes are, in our view, too low, and I do not propose to cover that ground again, though we think it is a matter of the greatest importance.
I want to speak briefly about two matters. The first is general economic policy, particularly with regard to inflation, on which I should like to say something about the speech with which the Secretary of State for the Environment opened today's debate. It was a notable speech. Once we got past the demography of Stechford, I was much impressed by the right hon. Gentleman's plans. Two points in particular that he made are worth underlining. One is that growth is no good unless it is for a good object and the other is that we need a total attack upon the poorer areas. We have failed to close the gap between rich and poor. We have failed to give the children born in the worst areas anything like the chance of those born in the best. I am sure that the way to set about tackling the problem is to make a total attack on the conditions of the worst areas. I would only add that there are some bad rural areas as well as bad industrial areas, and I hope that in the course of time the right hon. Gentleman will consider that problem as well.
It is generally admitted, and it is admitted by the Chancellor, that the greatest danger we face is inflation. How does the Chancellor think he will contain inflation? He hopes for economic growth. As I understand it, he also hopes that by reducing taxation he will induce the trade unions to moderate their wage demands. There are flaws in that argument. First, the Budget is accompanied by a large increase in the supply of money and credit. The Chancellor has apparently abandoned the weapon of trying to control the money supply. As I understand it, he will create money to satisfy whatever demands come out of the economy.
On wages, the Chancellor's policy seems to me to be based on faith rather than reason. He hopes that wage demands will be restrained because taxes are lower. He pointed out that the rate of increase had been halved in 1971, but

that was before the coal strike. The situation is quite different today.
This year the Government have shown that they have no consistent economic policy and that they have no answer to really determined groups of people other than to yield to force what they deny to reason. I agree that there is a strong case for Governments changing their mind, but I hope they will do so as a result of reasoned argument and not merely because they find that they cannot carry the day. I do not think we can say that this Government have so far been moved by reason. They have been moved by a stern opposition to their policies.
I notice that the Secretary of State for Industry, that unfortunate man, has now ceased to talk about profitability as the test of businesses which should be kept in being. The new word is "viable".
To this Government a viable business means any business which no businessman will support but which the Government dare not kill off. This is the test of viability. We cannot have very great faith in the Government's chances of avoiding inflation, and the Chancellor seems to accept that there will be inflation because, as everyone has pointed out, he envisages alterations in exchange rates. I agree with the right hon. Member for Kingston-upon-Thames that this is an admirable change of attitude but it is no good blinding ourselves to the fact that if this country is to go in for a series of devaluations, à la South America, this will do us no good at all as a major trading country.
I have always felt this difficulty about the Government's defence of their policies. As I understand it, they blame our present troubles on inflation under a Labour Government. They have said again and again that the reason unemployment is so high is that industrialists laid off labour because they could not afford high wage rates. What is their remedy? To inflate still further. There must be some logic lacking. If they simply pump money into the economy they may accelerate the changeover from employment of men to the employment of machines and no doubt that will have some effect on the unemployment rate but it will not be as big as it might have been 20 years ago.
On the other hand, a lot of it might go into consumer demand. I do not think that we can rely on savings being as high as they were last year, and a lot of consumer demand may go on imports so that we will be back with the well-known trouble from which we have suffered since the war of a consumer-led boom and eventually a balance of payments crisis.
There are certain factors in the present situation which are comparatively new. One is the replacement of labour by machinery and another is the strengthening of organised labour. The private sector today cannot afford strikes of great duration and the public sector can afford them only so long as the Government are prepared to stand behind it and make up the resulting deficit. Another feature is that our mixed system of Socialism and free enterprise allows all incentives to acquisitiveness to flourish but has removed a great many of the checks upon them. It has removed the rigid control of monetary supply and the check of universal competition. There is not much in the Budget pointing to any economic policy which will deal with the obvious dangers of inflation.
I agree that the Chancellor has conferred benefits on a wide range of the population, but this is undoubtedly a Budget which gives considerably to those who already have. It is impossible there for to argue that organised labour should not get as much as it can when organised capital is doing so well. It is not only fiscal changes which count here although I do not think that we realise entirely the immensely improved situation of the higher payers of surtax. They have benefited enormously in the last two Budgets. One of the troubles is that this is a Government associated with those who believe that we should run our economy by increasing their wealth and that it is right and fair to give to those comparatively well-off not only higher retained incomes but higher prequisites and better advantages while asking everyone else for restraint. This is not the right approach for making a universal attack upon inflation.
I suggest that the Government might examine one or two other changes in their policies since after all they have already shown themselves so flexible.
First they might repeal the Industrial Relations Act. I cannot see that it would be a bigger mouthful than those which they have already swallowed. I do not blame them for wanting to deal with industrial relations but it is apparent that this Act will not do so and it has bedevilled a great deal of our industrial life. They should bring in legislation which would acknowledge the rights as well as the responsibilities of labour, and they should couple this with some permanent board, such as the Prices and Incomes Board but not with exactly the same terms of reference, which would try to establish the principles upon which wage increases and all sorts of emoluments in the public sector should be based. They should look at the extension of monopoly power by some trade unions.
The Secretary of State for the Environment said that there should be a drastic attack upon our poorer areas. I hope that whoever is to wind up the debate will say more about the figures involved. I think that the right hon. Gentleman mentioned £160 million as being the amount at present earmarked for these schemes. When we think of the immense work done in our cities, let alone that done in the small towns and county districts, I believe that if we want to get employment moving and at the same time fulfil some socially desirable aims then we should put even more money behind a total attack upon our worst areas.
Could we not devise some means by which we offer some attraction for a certain restraint in wages and salaries? At the moment there is every advantage in pressing as hard as you can for higher wages. That is how the capitalist system is supposed to work. Those who do not press their rights to the utmost but show signs of restraint could perhaps be rewarded by some addition to their pension rights or in some other way in the future when additional purchasing power might be acceptable to them.
I turn now to the proposals for regional development. I do not share the enthusiasm of some parts of the Press about these proposals. In some respects this Budget will be damaging to regional development. The Government's policy still treats the whole of Britain outside the South-East as though it was a remote region. The very wording gives one the


impression that if one lives north of Watford one lives in the backwoods and camel trains have to be sent out with supplies to see that the natives are kept at subsistence level. The whole attitude is much too centralised.
One of the prime causes of depopulation, which I would rate as being as serious as unemployment in my part of the world, is the present centralised attitude and the lack of centres of power and decision-making outside of London. The result is that the top layer of these areas is constantly removed and the ambitious people leave and go to London because that is where the influence lies and where the jobs are. This is the wrong structure. We should have regional centres for the promotion of industry in the areas. It is bad enough to deal with the North-West or the North-East of England from London, but it is in credible to try to deal with Scotland or Wales from London. The new Minister should be in the Scottish Office.
A great deal of autonomy ought to be given to the offices within the regions because they all differ in their needs. The Government should go much further in moving their own offices out of London. In these Budget discussions I have heard hardly any reference to the discovery of oil off the North-East coast yet this is a major development and if properly exploited it could mean a whole new centre of growth in the north-east of Scotland. We should put there the Government offices which will deal with this matter. We should now be giving massive support to local authorities to develop subsidiary and support industries. I know that the Secretary of State for Scotland has said he will do all he can to assist but that assistance should be given now.
This is the moment when the county councils in my constituency are badly in need of practical help in taking the chances offered to them. This is a new situation. We cannot expect a county council unaided to be able to grasp the opportunities of subsidiary industries which might come in the train of oil. They are already looking for specialist advice which the Government through their regional plans should be supplying. On every matter—housing, harbour development, encouragement to local industrialists—there is need for a structure and for long-term planning.
The White Paper mentions that the Government are putting money into developing communications from the north of England and Scotland to the Continent. If we are going into the Common Market it is absolutely vital that the Government should put a lot of money now into the land bridge across Scotland. The Government do not say how much they are putting into the Scottish east coast ports, but it is vital also to improve not only the ports but the communications to go with them.
I come to the fiscal proposals as they will affect the development areas. Free depreciation will be valuable all over the country but not especially favourable to the development areas. The Financial Secretary said that the proposals offer development areas a greater degree of favourable discrimination than ever before. But a new business coming into a development area often does not make a profit in the first year or two. The arrangements, therefore, are of no assistance for that business's immediate cash flow. All it can get is a 20 or 22 per cent. grant. This is not enough to get new businesses into the development areas.
The Government are raising for the second time the limit for I.D.C.s from 10,000 to 15,000 sq. ft., except in the London area where it is to be raised from 5,000 to 10,000 sq. ft. This hits a type of business which is absolutely vital to some development areas. I cannot believe that this proposal will be of any assistance to those areas.
There has been no change in the petrol and oil duty. If we want to help the development areas one way of doing so would be by bringing down the cost of transport and freight. Will freight be subject to V.A.T.? I understand that passenger fares will not be subject to it but that freight will be. Will that liability be in addition to the existing duties on petrol and oil? If so, this will be a serious handicap to a constituency like mine and to all the remote areas.
I have read today of what is called the employment transfer scheme. I understand that the Government are to offer anyone who leaves a development area £400 to assist in his expenses. This is tied up with training. I do not object to training, but I cannot believe that the Secretary of State for Scotland can approve this scheme. In parts of Scotland


it is depopulation which is the scourge. Yet the Government are now inducing people to leave certain areas of Scotland and offering them £400 to settle elsewhere. I have always argued that one should take men to work, not work to men. This new move seems contrary to development area policy, which is that work should be taken to the areas. How do the Government expect this to work?
The problem of regional development is not simple. It is not simply a question of putting in some sort of jobs in the areas and leaving it at that. In Orkney and Shetland, for instance, there is a shortage of housing, a shortage of building resources, a shortage of many skills, particularly those concerned with business, and there is a shortage of variety of employment. To be of real value the development proposals of the Government should cover training and building. Will the new Industrial Development Executive have funds of its own? Will it have discretion in using those funds, or will it be dependent on the normal grants already available? What will be its relationship to the Highlands and Islands Development Board, which I imagine will go on? What about the White Fish Authority and other authorities which are the grant giving bodies.
To sum up, the Budget has considerable merit in many of its fiscal proposals and reforms, but it fails if it is regarded as an instrument of economic management or of regional development. To end on a slightly more optimistic note I think it will fail unless it is coupled with other measures and with a strengthening of the type of proposal which the Secretary of State for the Environment has outlined.

ROYAL ASSENT

Mr. Deputy Speaker: I have to notify the House, in accordance with the Royal Assent Act, 1967, that the Queen has signified Her Royal Assent to the following Acts:

1. Consolidated Fund Act, 1972.
2. Transport Holding Company Act, 1972.
3. Transport (Grants) Act, 1972.
4. Harbours (Loans) Act, 1972.
5. Electricity Act, 1972.

6. Maintenance Orders (Reciprocal Enforcement) Act, 1972.
7. Stoke on Trent Corporation Act, 1972.
8. University of London, King's College (Lease) Act, 1972.

5.35 p.m.

Mr. Simon Wingfield Digby: The right hon. Member for Orkney and Shetland (Mr. Grimond) spoke of inflation and voiced fears about the money supply. He went on to say that he thought savings would not remain at the present record level, but he said nothing about deficit financing which is a more obvious doubt about this excellent Budget.
I rather liked the right hon. Gentleman's phrase about the backwoods beginning north of Watford, but as he developed his argument I realised that he was not in the same camp as I am. Just as the red on the map has decreased rapidly in recent years, so have the white areas of the maps at the back of the White Papers. Soon the only places that are not regions will be my constituency and London. I have doubts about these liberal advantages that are being handed out to so many others.
When the right hon. Gentleman condemned the extension of I.D.C.s on the ground that smaller factories were of tremendous use in the development areas, I thought of the tremendous advantage they are to places like West Dorset which badly needs them unless there is to be a complete atrophy of our economic development.
My main object in intervening is to refer to the Budget statement yesterday and to speak about shipbuilding. Before doing so, I should like to thank the Chancellor of the Exchequer, or the Minister of State on his behalf, for two things which he has done in the Budget. First, he has rendered help to the small fixed income group which is much represented in my constituency by his proposals for the age allowance and the age exemption. Secondly, the death duty allowance, especially the provisions for the surviving spouse, will be of enormous asistance to those who are living in retirement on small incomes in my part of the world—and in the Minister of State's part of the world.
It is appropriate that the Budget should contain help for shipbuilding. There is


also a case for more of an inter-party approach to the problems of shipbuilding. In the past our debates have not been on party lines. Although we imagined that mistakes were being made by the Labour Government we tried not to exacerbate the situation. I was, therefore, sorry to hear the right hon. Member for Bristol, South-East (Mr. Benn) dragging in the question of nationalising the shipbuilding industry, which is a step in exactly the opposite direction.
The numbers employed in shipbuilding have declined dramatically from 126,965 in 1956 to 68,973 in 1971, partly due to the fact that few passenger liners are now being built. In earlier days once men went away from shipbuilding they were easily absorbed into other industries, but it is no longer the case and 90 per cent. of our shipbuilding is now to be found in the regions. Therefore, the employment angle is most important.
Fortunately, we still have a considerable order book of no fewer than 256 ships, amounting to over 4 million tons gross. The real trouble lies in contracts which were accepted without taking full account of the dramatic inflation which has occurred. Therefore, I believe the right way to deal with the matter is to offer a 10 per cent. overall grant. It would make no distinction between one firm and another, and would be some compensation for firms which, not unreasonably, miscalculated the rate of inflation.
It is only fair to note that similar problems are being faced in other parts of the world and that every major shipbuilding industry is in some difficulty. Even the Swedish yards, which have developed modern techniques, are in some difficulty. One of their most modern methods of moving sections of ships forward has been vitiated by the fact that ships being built today tend to be very much larger. The shipowners are not in a very much better position. Only the other day the Dutch increased the investment rebate for shipowners from 10 to 25 per cent. Even the Japanese, among other shipping communities, are in some difficulty. This is only a temporary phenomenon due to low freight rates. What is indisputable is the tremendous increase in world ship-borne trade. This is a matter in which our country should get its share of advantage.
It is only right that when extra money is having to be paid out to help shipbuilding, we should look back to the past, particularly to the Geddes Report. I have said often in this House, and must say it again, that the Opposition treated the Geddes Report as though it contained the law of the Medes and Persians. It was treated as something sacred which had to be carried out to the letter, and it was not intended to be treated in that way. Thank goodness, some of its recommendations were not carried out. Let us be thankful that some of the amalgamations did not take place and that Lower Clyde was not dragged down with Upper Clyde.
Some salutary lessons have been learned. This is a specialised industry and those coming in from the outside with a different type of experience are not necessarily the right people to grasp the industry's problems, as was well illustrated in the U.C.S. affair.
Nor can we be enthusiastic about the Shipbuilding Industry Board which, for various reasons, was a failure. I was astonished to hear the right hon. Member for Bristol, South-East (Mr. Benn) say that he thought the board should be revived for present purposes. When one remembers that it was connected with mistakes which have been made so expensively in the past, it is surely right that the Government should now try to help in a completely different way. The net result of its activities was that that help became lopsided. Help went to one yard and not to another, and it often went to those who least deserved it. Therefore, today we have a somewhat lopsided industry, which has the additional complication of contracts which are not paying because of wage and price inflation..
One of the great problems of this industry, as has been recognised in the White Paper, is that of labour relations. Traditionally they have not been of the best. I detect some signs of improvement, though I would not apply that argument to the Clyde where strikes have aggravated problems. No fewer than 398,000 working days were lost in 1970. Therefore, it is necessary that both sides of the industry should make a new effort to improve labour relations.
I believe there is a worthwhile future for the industry. We have only to look to other countries and to their problems


to see how many of them consider shipbuilding to be a worthwhile industry. We have sunk from first place in shipbuilding to a position a long way down the list. However, we still have many advantages in our special skills, and our climate is still suitable for this industry—despite experience with some of the modern paints which are very much easier to apply in a southern climate.
Some of the lessons which were not learned from Geddes are now becoming more apparant. Certainly the idea of amalgamation was a false lesson, as was the idea of bulk purchases. One lesson which is being learned is economy in design, something rather nearer to a series production, although every single ship must differ. I can think of two groups in the North-East which have been prepared to learn this lesson in respect of two classes of ship, one class large and one small. We have learned that it is possible to build on slipways very large ships indeed. The idea accepted five years ago that it was necessary to build them in shallow docks has been found to be expensive and unnecessary. It is a fine sight to see an enormous ship many times larger than the QE2 going down the slipway without difficulty. Therefore, it was obviously wise that we did not spend a great deal of money on shallow docks.
The figures of 10 per cent., 4 per cent. and 3 per cent., wisely granted by the Government do no more than provide a survival kit. We are still left with a problem of fitting the industry for our entry into the Common Market. However, many of the shipbuilding industries in the Common Market countries are in a similar position to ourselves and face equal competition from the Japanese—competition they probably want to do something about. I hope that when money is being paid out some thought is given to reconstructing yards or building new yards suitable for the future.
I am glad to see the setting up of the new Industrial Development Executive; one sees its impressive layout in Appendix "D" to the White Paper. However, the layout will be only as good as the men appointed to the Executive. We have already been given one or two of the appointments, but we have not yet been told the key man who will be responsible for shipbuilding. I hope that will be

done with the greatest care, and that it will be realised that somebody who may be good at handling an outside assembly industry is not necessarily the right man to deal with a shipyard. I am grateful for what the Government have done for the industry, but I hope that they will be looking to what will be the situation in two, three or four years' time.

5.50 p.m.

Mr. Hugh Jenkins: There will be many hon. Members on this side of the House who will agree with the implication at the beginning of the speech of the hon. Member for Dorset, West (Mr. Wingfield Digby) that if this Government remain in office much longer the entire country will be a development area. I shall not dwell upon the corollary that I draw from that. I leave it to the hon. Gentleman's imagination.
In my view, this is a rather worse Budget than has yet been realised. It has its good points and it would be churlish not to say so. I welcome the approach towards a negative income tax. I welcome the method by which it has been decided to do it by appointing a Select Committee to examine the proposal in detail. That is the right approach because, although this proposal has many attractions, there are some possibilities of disadvantage in that if it is not approached carefully it could lead to a jelling together of the country's financial, economic and social structure and make it more difficult to change social relationships. Although the idea is one which many of us have been discussing for some time and are glad to see in concrete form, we have reservations about it and shall want to look at it carefully.
The bad features of the Budget are unlikely to be altered fundamentally by an Opposition back-bencher—

Mr. Joel Barnett: I disagree.

Mr. Jenkins: My hon. Friend the Member for Heywood and Royton (Mr. Joel Barnett) disagrees with me. But I have a good deal of experience on the back benches and of failing to alter decisions by Governments of both parties. For that reason I am not over-optimistic about my powers.
However, I propose to take up the invitation extended by the right hon.


Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who suggested that we might provide the Government with the benefit of something to give away in the course of the Committee stage of the Finance Bill. I am glad to see the Minister of State on the Treasury Bench, because he knows what I am about to suggest he should give away in Committee. If when he replies to this debate he cares to say in advance what his intentions are, I shall be very happy to hear them.
I went to see the hon. Gentleman recently with a delegation of representatives from every section of the theatre—managements, trade unions, the societies, the Arts Council and all those concerned in the theatre. We made a plea to the hon. Gentleman, which is the subject of an early-day Motion in the name of the hon. Member for Peterborough (Sir Harmar Nicholls), supported by hon. Members on both sides of the House, that the value-added tax should be zero-rated in respect of the theatre.
I want to detail some of the arguments which it is hoped the Government will consider with a view to making this concession. The case for relief in respect of the theatre rests on a number of reasons. Taken separately, some of them might apply widely and thus open up the way to substantial exceptions which would be against the philosophy of the tax. I am not defending the philosophy of the tax. I do not like it. But I have to accept it for what it is, and I have to produce an argument which will enable the Minister to make the concession for which I ask without going too widely. I believe that the theatre is such a case. There is no instance that has such a combinaion of arguments which, taken together, are so persuasive. It is a combination of arguments which produces a unique case which can be conceded without creating a precedent for exceptions elsewhere.
The decline of the commercial theatre was recognised when it was relieved from entertainment tax and selective employment tax. The first point, therefore, is that the value-added tax would be a fresh imposition applied in an area which hitherto has been relieved of tax by Governments of both parties. It would not be a case of substituting one tax for another; for example, it would not be a

case of removing S.E.T. and substituting value-added tax.
There is little or no long-term private capital going into the theatre. The most recent building and rebuilding of theatres has been achieved by public funds. The theatre has a high unemployment rate. Among performers it is about 50 per cent. Automation has hit the entertainment business earlier and more drastically in that the electronic reproduction of a single televised performance can engage a larger audience on one night than all the theatres put together.
I believe that the theatre can and will remain a mixed economy. Earlier today the Secretary of State for the Environment spoke about the permanence of the mixed economy. I do not altogether agree with that. I am more hopeful about the development of our country in economic terms than that. I should like to see a large-scale development of Socialism. However, the mixed economy of the theatre is a semi-permanent state, because we cannot distinguish between the public supported theatre and the commercial theatre.
The theatre as a whole is stronger in London than it is elsewhere. But thanks to Government help, provided by Governments of both parties through the Arts Council, it is recovering rapidly outside London. It is just at the point where it is beginning to recover with public financial aid that value-added tax will be most damaging. It will be a new imposition in an area which hitherto has been free from this or any similar type of taxation.
There is a growing recognition by Governments, by an increasing number of local authorities and by informed opinion generally that the theatre is a cultural need. In spite of certain manifestations which are really the "froth" of the theatre, fundamentally it should be part of the municipal furniture of every respectable community. In its way, it is as basic as food or housing, and it ranks in character with education. Indeed, its link with education goes beyond analogy. There is a close link between the progressive theatre and the educational system. The theatre is a feature of many education projects and of many local education policies. The Arts Council is financed through the Department of Education and Science and answers to a Minister associated with that Department.
On page 48 of Command 4929 about the value-added tax, the Government say that they intend to give zero rating to books, booklets, brochures, pamphlets and leaflets, newspapers, journals and periodicals. If that is to be carried out, why is not the theatre included? Are we not in the area of communications and the spread of ideas? There is no real argument for stopping at newspapers, books and periodicals.
The importance of the contemporary theatre in this area is considerable. If it is intended to avoid imposing the tax upon the spread of ideas and communications and the freedom of expression, clearly the theatre is in that area and is more and more in the area today. So that is another argument which perhaps does not apply so fully elsewhere. I should like to see the cinema excluded as well. But if the Minister says that that is taking matters too far, I shall be forced to say that the exclusive argument for the theatre cannot be challenged whereas, if I move into the area of the cinema, it may be that the Minister will be in a position to say that the next claim for exemption will be for sport, and so on. Of course, if he is prepared to make this wider concession, by all means let him do so. It is for the Minister to decide, but in any event there are solid arguments for excepting the theatre or providing it with zero rating.
The relief of the theatre from value-added tax would be in accordance with public policy. The Paymaster-General's endeavours to provide patronage would be greatly assisted, because he has several times said that he would like to increase the sources of subsidy to the theatre. I think that it will be more difficult if private patronage is going into a taxed article.
The British theatre is an acknowledged tourist attraction of major proportions because of the international reputation of both the subsidised and the commercial theatre. In regard to the balance of payments, therefore—I am afraid that it will need more attention before many weeks or months arepast—there is as little reason to tax the foreign consumer of British theatre as there is to tax the foreign consumer of British whisky. This factor ought not to be ignored.
I said that I would be brief and would confine myself to a single point. It is not that I am unaware of the many other things in the Budget which could be critically approached. However, my non. Friends and, indeed, some hon. Gentlemen opposite have dealt with some of the problems and will doubtless deal with others in future.
If the argument were—I do not think that the Minister will try to get out on this point—that there are some aspects of the theatre which are not of the public service character which I have described, and if the Minister were to say that there are some manifestations of the theatre which he would like to tax because he does not like them and does not think they contribute anything to the community and may indeed, in the view of some people, be doing less than a service to the community, that argument cannot be sustained because it stands equally in the area of books, booklets, prochures, pamphlets, leaflets, newspapers, journals and periodicals. As it stands, the Minister is proposing a policy of free porn but to tax Ibsen, Shakespeare, Chekhov and Shaw. No Government could possibly sustain that argument. Therefore, it is with confidence that I look forward to the concession later in proceedings on the Bill.

6.2 p.m.

Mr. Peter Trew: I listened with great interest to the hon. Member for Putney (Mr. Hugh Jenkins). Although I cannot aspire to his wide knowledge of the theatrical world I shall be speaking about value-added tax. I do not want to comment on the persuasive argument put forward by the hon. Gentleman except to say that, as he acknowledged, to allow one special case is to open the door for many others. The more goods or services that are zero-rated, the harder it is to keep the uniform rate down to 10 per cent. To adapt a well-known phrase, one man's zero rate is another man's tax increase.
This has been a bold and imaginative Budget. One of its most remarkable features has been its almost benign reception by the Leader of the Opposition. He rightly and understandably reserved his judgment on most of the proposals but declared his all-out opposition and that of his party to value-added tax. The


more I study the tax as it has been presented, the more I wonder whether the right hon. Gentleman was wise to be so hasty in condemning it.
The Conservative Party has long been committed to the principle of shifting the burden of taxation from earning to spending. I can understand that on philosophical grounds the Labour Party might not agree with that principle and that this might be a legitimate division of opinion between the parties. If it were on this ground alone that the Labour Party was opposing the tax, I could understand and respect it. But for those who see some merit in shifting the burden of taxation from earning to spending—both the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) and the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) are on record as acknowledging the disincentive effect of high direct taxation—the argument is not on the philosophical question whether one should tax spending at all, but on what is the best way of taxing spending.
A general tax on expenditure should fulfil four requirements. It should be broadly based, it should be possible to levy it on goods and services, it should be possible to charge it on imports and to rebate it on exports, and the rate should be comparatively low. All the candidates for this job of taxing spending fall down on at least one of those requirements with the single exception of V.A.T.
A purchase tax cannot be applied to services. A payroll tax cannot be charged on imports or rebated on exports. A retail sales tax would require too high a rate at the final stage. The cascade tax is not easy to rebate on exports because of the difficulty of calculating how much is borne by exports, and it has the further disadvantage of encouraging distortion of the industrial structure.
Therefore, by process of elimination, one is left with value-added tax which fulfils all those requirements. It is broadly based, it can be applied to services as well as to goods, it can be charged on imports and rebated on exports, and the rate is comparatively low. I believe that the tax would have been chosen on its merits, regardless of entry into the E.E.C. Indeed it has been chosen by Sweden, which is neither a

member of the European Economic Community nor a candidate for entry.
However, any tax on spending is open to certain potential objections, both political and technical. Looking first at political objections, V.A.T. is potentially regressive, potentially inflationary and can be expensive to administer. However, its impact on lower income families, taking into account the range of zero rating and exemptions, has been greatly cushioned.
The research division of the Library has analysed for me in detail the 1970 Family Expenditure Survey to ascertain what proportion of family budgets in that survey would have been free of V.A.T. Taking three ranges of income, the answers are as follows. Between £10 and £15 a week, over 60 per cent. of family budgets would have escaped V.A.T.; between £20 and £25, the figure is over 50 per cent.; and between £35 and £40 it is over 40 per cent. Taking the average for all households, over 40 per cent. of the family budget would have been free of V.A.T. That is not my definition of a regressive tax or one which bears harshly on families with low incomes.
I noted with interest that when he spoke yesterday the right hon. Member for Stechford was careful not to say that the tax was regressive. In any event, it is not realistic to look at the effects of the tax in isolation. One must look at the operation of V.A.T. in conjunction with income tax and the social security system. It looks very likely that V.A.T. will be operating in conjunction with a form of negative income tax, which will be much easier to take account of the special circumstances of individual families.
There is the possible objection that the tax can be inflationary. The N.E.D.O. booklet, assuming value-added tax at a rate of 10 per cent. with rather less generous relief and exemptions then the tax introduced by my right hon. Friend, estimated that it might increase the cost of living by 1½ to 2 per cent. provided that both purchase tax and S.E.T. were abolished. That is not a tax which is highly inflationary.
However, we know that in some European countries the introduction of V.A.T. was used as an excuse to raise prices beyond the level justified by the rate of


tax. It would be sensible of the Government to acknowledge that that happened in Europe, that it could happen here and we should take advantage of the time that is available to us to think of ways by which this might be forestalled.
There is then the objection that the tax could be administratively expensive. The N.E.D.O. booklet puts the additional number of civil servants required at 8,000, but it qualifies it by saying that the figure will depend on the number of rates and the coverage. Bearing in mind that my right hon. Friend has adopted only one rate with a generous relief, that is possibly a high estimate.
In any event, one must look at the question of additional civil servants in conjunction with the staff savings resulting from other reforms in taxation, and in those I include the abolition of the Land Commission. It would also be realistic to take account of the possible saving of 10,000 to 15,000 civil servants envisaged by my right hon. Friend as a result of the introduction of a form of negative income tax.
It seems, therefore, that none of the potential political objections to the tax—that it could be regressive, inflationary or expensive to administer—can be sustained. I am wondering what ammunition the Opposition will use when hon. Gentlemen opposite embark on the massive onslaught on V.A.T. to which their Leader has committed them. It rather looks as if he might be sending them into unarmed combat.
Just as my right hon. Friend has minimised, if not eliminated, the political objections to the tax, so I believe he has allayed fears on the two main technical or practical objections. The first was the question of purchase tax-paid stocks, on which his proposed transitional arrangements will satisfy most people. The second was the question of early publication, and by publishing the draft Bill and White Paper now he has made it possible for businesses to consider how their accounting systems should be altered, what the financial effects of the tax might be on their businesses and what they might require in the way of new or modified accounting machines or computers. There is still a question mark over whether there are enough such machines on the market to enable them to be in-

stalled, programmed and made operational by April, 1973, and this is an important point to which the Government should give attention.
A point which has caused widespread concern and which does not appear to be dealt with in the White Paper or the draft Bill is the question of bad debts. Many people fear that traders might find themselves in the position of having to account to the Customs and Excise for V.A.T. which they cannot claim from a defaulting debtor.
I can understand why the Customs and Excise would be reluctant to forgo this revenue, because the defaulting debtor might have already succeeded in claiming V.A.T. on his inputs from them. However, it seems to me that where a debtor is actually bankrupt or has gone into liquidation and does not owe money to the Customs and Excise, there is a case for some relief to his creditors in respect of the V.A.T. which they have been unable to collect from him.
There are two other points on which I would like clarification. The first concerns excise duties. I understand that V.A.T. is to be superimposed on excise duties but that the total rate of tax will be unchanged, so that the present duties will be reduced by the amount of V.A.T. I should be grateful for confirmation of this.
The second point is the question of the use of the regulator in conjunction with V.A.T. An article appeared in today's Financial Times in which Mr. Kelsey van Musschenbroek wrote:
Mr. Barber is retaining the economic regulator mechanism—part and parcel of Purchase Tax which V.A.T. replaces, along with Selective Employment Tax—but with a power to vary it 20 per cent. either way, compared with half that figure under Purchase Tax.
I have read carefully through my right hon. Friend's Budget Statement and I can find no reference to that. Perhaps the author is referring to some earlier legislation which is remaining in being. I would be grateful if my hon. Friend would comment on this because it seems to be a factor which could greatly increase the flexibility of V.A.T.
Looking forward to our entry into the E.E.C. and the question of harmonising V.A.T., the British blend of V.A.T. is undoubtedly the mildest in Europe. We should make it clear now to our prospective European partners that any


harmonisation will be downward, towards the British system, and not upwards, towards theirs.
I congratulate my right hon. Friend on the way in which he has devised and presented V.A.T. He has done this in a way which has minimised most of the objections. I also congratulate him on the whole of his Budget, of which these proposals form a part.

6.16 p.m.

Mr. Neil McBride: I trust that the hon. Member for Dartford (Mr. Trew) will acquit me of discourtesy if I do not follow him into the realms of V.A. T. On another occasion I may take issue with him on this extremely interesting subject. I shall devote my remarks to some of the problems facing the part of the country which I have the honour to represent, namely, Wales.
In his Budget Statement the Chancellor spoke of many important matters including cost inflation and the need, in his view, to reflate the economy. I would like to know why he has felt it necessary to reflate on such a massive scale.
At no time did the right hon. Gentleman mention the inflationary effects that heavy rent increases will have. I refer, of course, to the swingeing increases which will be borne by half the population, local authority and private tenants, as a result of the enactment of the Housing Finance Bill. This Measure will take the pound out of the pockets of millions. The Government are seeking to place this legislation on the Statute Book. By it they will claw back millions of pounds beginning in the local authority financial year 1972–73.
Although the Chancellor and his colleagues speak glibly about the Housing Finance Bill. its full effects on the 270,000 local authority tenants in Wales have not been made clear. It will increase their cost of living and depress their standard of living. The arithmetic is simple. About 50 per cent. of those 270,000 tenants will have their rents increased from 1st April this year by 50p. This retrospective legislation permits that to happen. The other 50 per cent. will have their rents increased by £1 from 1st October, 1972.
It is obvious that millions of pounds of purchasing power will be taken out of the Welsh economy in this way. The global sum in terms of the national eco-

nomy will be astronomical. On the one hand the Chancellor is talking about reflating the economy while on the other hand he is clawing back tremendous sums of money from local authority and private tenants. Over the nation as a whole this legislation will affect 5½ million local authority tenants. The clawback will be enormous.
What will be the result of all this in the Principality? It is clear that thousands of workers will have their purchasing power reduced to such an extent that wage claims will be lodged to offset the loss. We must never forget that the genesis of all wage claims lies in the kitchen.
The resultant triennial rent reviews and means testing for rebates for public and private tenants alike will see workers seeking to protect living standards from a vicious attack which is connived at by the Prime Minister, the Chancellor and the Secretary of State for Wales. The operation of the Bill, coupled with rating and valuation in 1973, will result in greater demands made on ratepayers and this ill-judged legislation will further exacerbate the clawback by a further demand for increased rates.
People in Wales and the United Kingdom generally look with a great deal of apprehension at this because they see the risk of inflation ripples reaching out and lapping to all sections of the economy. The result will be that workers will be forced to protect their living standards by lodging wage claims. This is particularly important to Wales where income is only 85 per cent. of the national average and the amount of weekly income paid in tents is 11·2 per cent., the third highest of any region in the United Kingdom. This is of importance to the Principality and it will be important in the Merthyr Tydvil by-election.
It is right to emphasise the nature and extent of the proposals in the Housing Finance Bill because in low-wage and low-rent areas such as Wales a surplus is produced and there is a legally defined limit in the Bill concerning the amount taken by the Government, only half of which is to be returned to local authorities. Half is kept by the Government for indefinite purposes. When we ask what those purposes are, we receive no answer. These amounts are paid into the Consolidated Fund and I think that is totally


wrong. The clawback of purchasing power as a result of the Bill will offset to a considerable degree the tax remissions that the Chancellor has spoken about. That Bill, in addition to clawback of purchasing power and generating wage demands, is intolerable, vicious, antisocial and certainly anti-working class.
I look at the position of old-age pensioners and the Chancellor's decision to improve their already serious financial position. As a result of public pressure the Tory Government have been forced to make an annual uprating of pensions, but the increases are too small. When I speak about old-age pensioners I speak with feeling. I am working class and proud of it. Parents of working people in the evening of their days deserve the best that the nation can give and this Government are not giving them that best. [Interruption.] If the hon. Gentleman would speak more loudly, we would understand what he is saying. Tories are always good at firing from a sedentary position. They are fireside fusiliers par excellence. An increase of 12½per cent to pensioners will not make living easy for them. They will still have to count the pennies. It is a degrading prospect for them and no reward for a working life contribution to the country.
In September, 1971, a petition signed by 50,000 people in Wales was presented to the Secretary of State for Wales in Cardiff asking for £14 for a married couple and £8 for a single person in pensions. I agreed with that estimate. The first step in that direction could have been made in this Budget with an increase of £2. I deliberately ask the question, is £10·90 enough to maintain a married couple? It is derisory to believe that a single person can live decently on £6·75. Some people will spend more tonight having a meal in a London restaurant.
The old people are being asked to wait until the autumn. Help for them is always to be given in the future. It is in the nature of things that because of their age the need is urgent. The need for help is now and the increase should have been £2 extra. Even at this late stage the Minister of State, whom I respect and believe is not without compassion, should convey to the Chancellor the deep-seated feelings of resentment in

the country about the smallness of this increase.

The Minister of State, Treasury (Mr. Terence Higgins): Would not the hon. Member agree that if we had followed the policy of the previous Government of uprating every two years, it would be a question of waiting not for next autumn but for the autumn after next?

Mr. McBride: Perhaps the Minister of State did not listen to me. I said that it was public pressure and Labour Party pressure which forced the present Government to have an annual uprating.

Mr. Higgins: If that is so, it is curious that pressure from the Labour Party totally failed to create the same impression on the hon. Member's Government.

Mr. McBride: As to inflationary conditions in the country, it is a measure of the non-success of this Government that they have been defeated in that regard. The hon. Gentleman is amused but old-age pensioners are not amused. He could go tomorrow to a conference in Barry in Glamorgan, the county in which I live, and then he would laugh on the other side of his face. The Tory Party has never understood the great respect which working people have for their parents. They have never understood it and never will. I hope that the laughter by the Minister will be reported as something derisory and scornful which I would not tolerate from anyone else.

Mr. Higgins: I should make perfectly clear that any views we have expressed on the Government Front Bench referred to the hon. Member's arguments. I think I am right in saying that there are more pensioners in my constituency than in any other. The hon. Member has referred to parents and what he said on that is universally shared, but perhaps he should bear in mind the failure of his Government to do anything for the over-80s as we have done. When a Private Member's Bill was attempted on this subject hon. Members opposite, by constant filibustering, frustrated each attempt.

Mr. McBride: I have heard the hon. Gentleman speak many times and I know that he has knowledge of accountancy. He knows that pensions are based on computation of payments made in industry of 10 per cent. over 40 years, but


the over-80s have never contributed a penny to the pension fund. It is totally wrong to compare their position with that of those in the contributory scheme where pensions are given as of right to old-age pensioners. The hon. Gentleman's argument is not related to mine, and he knows it.

Mr. Maurice MacMillan: Mr. Maurice MacMillan rose—

Mr. McBride: No, I am sorry, I will not give way again.
The lack of success by the Tories to keep prices steady has resulted in heavy deprivation for our people. The Tory Government did not understand that the old folk asked for only sufficient to maintain decency and independence. It is a matter of deep personal regret, shared by all my hon. Friends, that at this time it has not been given to them at a moment when the country could have afforded it and the people of the country would have applauded it.
In regional development, there is plenty of scope for the new grants system in Wales and the opportunity here for the new Minister for Industrial Development is without limit, because in mid-March there were 55,000 people idle in Wales, which looks for labour-absorbing industries. The unemployment total in Wales is the highest for a quarter of a century. Allied to that is the poor record in advance factory provision by the present Government and the low rate of new industry which is being attracted. I have the Secretary of State's figures and my case is based upon information supplied by the Government. The redundancies in the Principality totalled 27,270 from 1st July, 1970, to 21st January, 1972. The new scheme will give the new Minister ample opportunity to shine in Wales. The Welsh people are realists. They judge performance and they will do so in this case. One knows of the special responsibility for private industry and industrial development in the assisted areas.
The economy of Wales must go forward in a programme of planned industrial development assisted by carefully-phased investment policy. I ask why there has been no planning for a specific period of, say, five years to ensure industrial development providing jobs for the present total of Welsh workers who are available for employment, plus con-

tingency planning to provide opportunities for school leavers in the Principality. In this connection I share the view of the right hon. Member for Orkney and Shetland (Mr. Grimond), who said that it was ironical to train people and then provide them with £400 to leave the place where they had their roots.
The people of Wales have been, under the Tory Government, the unwanted step-daughter. They want to live and work in the Principality. As the right hon. Member for Orkney and Shetland has suggested, they should not be offered inducements to move but rather the reverse, through the provision of opportunities for work in Wales which is their right. We cannot any longer in Wales see the Tory Government disregard and fail to utilise the talents of the people. It has taken a long time for this Government, figuratively speaking, to stand on their heads and abandon the hit-and-miss policy. We shall wait and see with what speed they act to give Welsh industry revitalising confidence resulting in the attraction of more industry to Wales.
I have with me the Tory newspaper of Wales, the Western Mail. Yesterday it had the headlines
Faster economic growth my aim, says Barber
and
Industry will not rush to invest in Wales".
The latter headline can be disproved by the speed with which the Government act, and I put the challenge to them.
The Government are acting as a result of pressure by the Opposition and we shall examine the proportions going to Wales of the amounts stated in the White Paper in paragraph 59. Free depreciation and industrial building allowances are estimated in 1973–74 to cost a total of £115 million, rising to £450 million in 1975–76, with regional development grants of £250 million in 1973–74 rising to about £300 million in 1975–76. We shall be interested to know the total proportion of these amounts which will go to the Principality.
Paragraph 60 states that Government policy is giving to industry confidence to invest at least until the end of the transitional period of entry into the Common Market, which ends on 1st January, 1978. Is there a Common Market embargo on this? What is the reason? It is a fair question to ask.
The Government's social responsibility in Wales is above all to provide work for the people of Wales, who regard the Government as being responsible for the present position. I charge the Government with being proved guilty by reason of the failure of their policy. The Government are tattered and battered and that is the reason for their fiscal alterations. They have failed in Wales because of policies which are outworn and doctrinaire.
Today the Western Mail says:
The view at present seems to be that Mr. Barber's Budget will promote a national climate of expansion in which industrialists will want to move to areas such as Wales that are cushioned by the new grants. This prospect is uncertain for several reasons. The hope of nationwide expansion is admittedly strong but—on the showing of recent reflationary budgets—not assured. The resumption of the regional differential in grants has been accompanied by serious disadvantages to the poorer regions.
We shall want an answer to that one. That is what a Tory newspaper says.
Wales is faced with the enveloping shadow of unemployment. It is reckoned that over 50,000 people will be idle at the end of the next 12 months. I attribute this situation to the fading out of investment grants on 27th October, 1970. This was responsible for the shortage of cash liquidity which made so great a difference to industrial expansion in and industrial attraction to Wales. Therefore it is necessary that there should be created a new feeling of confidence in the Principality, and this applies to the country as a whole.
But I warn the Government that the unemployed of Wales will feel that to wait another 12 months would be insulting to the Principality, and I say quite deliberately that the people of Wales have waited too long already. I agree with Mr. Graham Saunders, Secretary of the T.U.C. Advisory Committee, that the re-introduction of investment grants is welcome and with him I also share the view that they should never have been abolished. But now the Tory Government are at the stone of repentance. I would not say that they are right honourable sinners, but they are culpable sinners.
It was interesting yesterday to see the Secretary of State for Trade and Industry, figuratively speaking, standing on his head. He did everything but ask for a

form to join the Labour Party. Welsh Labour pressure has assisted in the overturn of Tory Government policies in the fiscal sense, but the industrial investment position must be radically changed in Wales—changed for the better, and soon—because the people of Wales are distrustful of a future under a Tory Government, and instead of spending money they are saving on an unparalleled scale. The average saving of each family is £40 more than the Government calculated, and this is an important factor for industry. The Government failed to consider that factor.
I ask the Government and the new Minister for Industrial Development to secure the secondment of a representative of his office to a centre in Swansea. I do so for a very good business reason. The City of Swansea is the natural centre of an area of 350,000 people. In the reaching of instant decisions, a representative of the new Ministry there would help very materially. He could assist in attracting industry to the new industrial estate at Morriston in my constituency, because the Government have failed so far to get tenants for the new factory building and for the rest of the sites.
I want to turn now to that section of the White Paper which deals with communications. It talks of entry into the Common Market and of providing ample capacity in and access to ports. I hope that we never join the Common Market, but the South Wales ports have access not only to Europe but to the world. Swansea is a shorter steaming distance from the Americas.
A recent British Road Federation report emphasised that all road networks were being directed towards those ports with a short sea passage to the Continent. It is wrong that, in an important area where development could benefit the Principality and the United Kingdom, careful thought has not been given to the British Transport Docks Board ports in South Wales. I agree with the assessment of Mr. T. S. Roberts, the Ports Director of the board's ports in South Wales, that these ports—particularly Swansea, which is wholly in my constituency—stand at the gateway to the world and not just to Europe.
That is how our trade should be orientated—not just to help trade across the Channel. It seems that the Common Market has no interest in South


Wales—an impression which is borne out in the White Paper. I object to the omission of any reference to these ports and to road communications with them. I shall be glad when the M4 swings in closer to Swansea, but there is already road communication with the Midlands, in which direction I have always supported the idea of a clearway. On economic grounds, these ports have a major rôle to play in the future of the Principality and the whole United Kingdom. There is an early day Motion supporting this view and signed by many hon. Members.
The Government must now state their confidence in and the future rôle of the South Wales ports. That is the right of the Welsh people. That is why I have drawn attention to these important matters. The Budget, the annual state of the nation's housekeeping, is important, but those who live in the house have a right to have their views considered. No one has a better right than the people who have never benefited much from the Tories, the people whom I hope I serve, whom I live among and who have contributed greatly to our economy—the people of Wales.

6.43 p.m.

Mr. Robert Taylor: The hon. Member for Swansea, East (Mr. McBride) gave his view of the Housing Finance Bill. I do not think this is the right time to reply to that matter, which is best left to the next stage of the Bill. He then talked of the position of pensioners and his somewhat lengthy exposition was dealt with by the brief intervention of the Financial Secretary. If that is not sufficient, the record of the present Administration compared with that of the last is open for all to see. It would not be right for me to comment on the problems that face the Principality, so I will turn immediately to that part of the speech of my right hon. Friend the Chancellor of the Exchequer which I consider to be of the greatest importance for the country in the medium and long term.
I refer to my right hon. Friend's proposal for the reform of corporation tax in favour of the system recommended by the Select Committee. My right hon. Friend paid tribute to the thorough way in which the Select Committee examined this problem, and it is pleasant to see

here my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) who played such a prominent part in its deliberations.
Before that Committee reported, like my right hon. Friend I believed that the two-tier system would be the most acceptable, the easiest to understand and probably the most likely to be implemented in the forthcoming Finance Bill. But the decision has changed in favour of the imputation system. Having read the report, I now agree that that system is preferable. But whichever system was brought in, there is no doubt that most of our current problems—high unemployment, slow growth and low investment—stem from the taxation policies of the previous Administration, particularly their policies for company taxation.
When we were returned to office in 1970, in the unlikely event of a company distributing its entire profit, with corporation tax at 45 per cent. and income tax at 8s. 3d. in the £, the amount out of each £100 which would have reached the pockets of the shareholders was £32 6s. 3d. Many hon. Members may feel that that is the right balance—it is different with different companies and different industries—but if that entire amount were distributed the remainder would go direct to the Exchequer and nothing would remain for reinvestment. So if that was about the right balance, nothing would remain for the future prosperity of the companies concerned.
The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) said of the Chancellor's proposals for the reform of corporation tax:
Equally misguided is the change in corporation tax.…The change will give far greater benefits to shareholders than it will bring to the economy of the country. There is likely to be a considerable increase in the proportion of profits now put out in dividends.…Companies which use their profits for investment will be worse off than before; yet the overwhelming evidence from other countries as well as from here—from the United States, Germany, France and Japan—is that the great bulk of companies' investment comes out of ploughed-back profits."—[Official Report, 22nd March, 1972; Vol. 833, c. 1531.]
That is absolutely true, but what the right hon. Gentleman did not say was that it comes from ploughed-back profits after those companies have paid their due taxes and a fair return to their shareholders—in other words, when there is money left


for reinvestment to be ploughed back for the future.
Under the situation which we inherited from the previous Administration, the amount remaining was absolutely negligible. That is why the right hon. Gentleman could say in the same speech, although a convenient distance removed from that first quotation, that the current rate of investment was derisory. He cannot have it both ways—that the current rate of investment is derisory and also that the current system promotes the greatest investment.
One part of the Chancellor's reform of corporation tax about which I have some doubt is his proposal that there should be relief for small companies, that companies with profits under £15,000 a year should have a reduced rate of tax and that there should be further marginal relief for companies with profits up to £25,000 a year. The Select Committee which inquired into corporation tax had before it a memorandum from the Inland Revenue which put forward objections to that. The objections are quite easy for anybody to see. First, there is the opportunity for companies to split up and create a multiplicity of companies so that they get the benefit. Secondly, big companies in bad years will get a benefit that is not intended for them. Thirdly, it may be that bad or weak management will be subsidised at the expense of dynamic and thrusting management.
I therefore hope that this particular point may be reconsidered and perhaps the help that is intended, if indeed it is necessary to give small companies help in this way, should be linked to the net asset value of the company. If this is around £50,000, with good dynamic management the profit can easily be in the region of £12,000 to £20,000. But it may be that a company with net assets of around £100,000 is producing a poor return, and that could get the benefit of this marginal relief.
I think that the Budget will put the country on a very sound footing for many years to come. I welcome the provisions in every respect except for the reservations I have declared. I am very sorry that the right hon. Member for Stechford should have poured scorn on the proposals for the reform of corporation tax. It can only be presumed from this

that in the unlikely event of his ever having an opportunity to play a part in deciding the taxation of the country in the future, he would return to the present status quo. If that is so, it is a pity he did not submit a memorandum to the Select Committee on the reform of corporation tax so that we could have had that view on record, because it needs to be made very clear to industry as a whole that there is at least one person in high places who has not learnt the lesson of the past five years.

6.51 p.m.

Mr. David Ginsburg: The hon. Member for Croydon, North-West (Mr. Robert Taylor) concentrated his remarks on the reform of corporation tax—a very important subject. He seemed to be blaming all the nation's current economic ills on the tax policies of the previous Labour Government—a view he would not expect me to share because, after all, many of the problems with which the Labour Government were grappling had existed in this country for many years.
Although I shall have some very critical comments to make about the Budget later, I wish to begin with a brief word of thanks to the Chancellor. He is a Yorkshireman and he has made Yorkshire into an intermediate area. The Hunt Committee recommended this. Previous Ministers on both sides of the House have been very slow to move in this matter. The Prime Minister when he introduced the Local Employment Bill in 1959 would not help and the same was true of the former Labour Government, with the result that the older parts of the industrial West Riding and especially the centres of the wool textile industry were neglected, despite pressure from Members of Parliament and local interests. There were also very great anomalies until recently. In my own constituency it was difficult to justify a situation in which the whole of the town of Dewsbury, which is mainly a wool town, did not qualify for intermediate status yet a part of the Borough of Ossett next door, where the problems were no different, did.
The Chancellor will be the last to underestimate the task we face. Yorkshire badly needs new job opportunities. In my own constituency, for example, all three pits have closed in the past seven


years and every year there has been at least one major mill closure in the area. This welcome news about intermediate area status comes only just in time to avert what might otherwise have been an extremely serious situation.
This is the right hon. Gentleman's second Budget. Both Budgets have been noteworthy as an exercise in tax reform. The Chancellor has shown remarkable ability and resilience in standing up to officialdom and getting his way, but an essential feature of all these reforms is that they are medium to long term in operation. Nothing will bite until the financial year 1973–74 and much will only bite a year or two later.
Of itself, this need not matter. Reforms are made to last and not to be ephemeral. But there is one important economic consequence, namely that those reforms which reduce tax burdens are not going to have an immediate effect on the level of employment. Moreover, a whole range of the other tax concessions that are announced in the Budget—I am not referring specifically to the reforms here—will have their major effect in 1973 and not in 1972.
It is the nature of Chancellors that they are remembered not by the purity of their intentions but by the consequences of their actions. That is why the job has been a graveyard of so many careers. My right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) has a secure place in history for restoring the balance of payments even if the ballot box prevented him from realising hits other fiscal, social and economic aims. I think it is equally clear that the present Chancellor could have a great place in history as a tax reformer, but only if he achieves his central economic design of promoting a stable level of employment with sustained economic growth. If he succeeds in that his reputation as a reformer will be enshrined; if he fails, another Chancellor will have to apply different medicine, and who in history will care about this Chancellor's reforms?
The Chancellor may argue that I am being needlessly gloomy. After all, he is injecting substantial purchasing power into the system this year. I would remind him that last year he injected as much as £700 million and it was not enough; he had to make more concessions twice

in the year and still unemployment mounted.
Over last year he reduced the surplus transferred to the national loan fund by £900 million, and this year he intends to reduce it by £1,400 million. Is an extra injection of £500 million as compared with last year enough to double the rate of increase in the national product? The Chancellor may be right in his judgment, but I think we are entitled to sound a note of very great caution. It is quite clear to many of us on this side of the House that high unemployment is going to be pretty persistent. This year it should go down—owing not only to the measures but to the raising of the school leaving age—but it may go down later rather than sooner.
Two relevant comments need to be made, therefore. First, even more measures to encourage the employment of labour need to be adopted quickly. I must say that I am rather surprised that in this Budget, like the last one, the Chancellor should have eschewed making more use of the National Insurance Fund. He should have reduced and not increased the burden of national insurance on employers. There could have been—for an unorthodox man could consider some unorthodox ideas—a three-months' stamp-free holiday for employers of new employees. I would remind the House that Lord Beveridge always envisaged that at moments of high unemployment a greater burden of national insurance should fall on the Exchequer rather than on the employers or the contributors.
My second comment is that the test of the Chancellor's measures is whether he can sustain the momentum of expansion next year. Nobody wants another 1963–64 when, after expansion got under way, the brakes had to be slammed on again. The present Chancellor is more fortunate. He is able to build on a solid balance of payments surplus. But everyone agrees that the position next year cannot be so strong, and it would be tragic if a Government were then driven into a policy of restraint because of a weakening of the standing of the £ in the foreign exchange markets.
Many of us feel that the rate fixed for the £ by the Government in their negotiations last autumn was on the high side. A basic corollary to a sure policy


of expansion for 1973, therefore, is a willingness by the Government to pursue a more flexible policy for the £ until a more settled international agreement has been reached. I trust that the Chancellor means what he implied on Tuesday, and not what the Prime Minister seemed to be hinting at this afternoon.
Turning to the Chancellor's reforms, I did not expect to welcome him, however cautiously, into the ranks of the egalitarians. Socialism is about equality, and the Chancellor's thoughts about an inheritance tax are not dissimilar to ideas which the late Hugh Dalton was adumbrating 30 years ago, based on the writings of the Italian Socialist economist, Rignano. Taxation must be viewed as a means of redistributing income and capital and not merely as a provider of revenue to finance public services or as a means of managing demand.
Taking the Chancellor's two plans the linking of social security with tax and the move from estate duties towards inheritance duties, he is at least providing the weapons for achieving more genuine egalitarian policies. I am not for a moment suggesting that he and my right hon. Friend the Member for Stechford would do the same things in such a situation, but the Chancellor will have provided the right machinery. He will thereby have done something good for parliamentary government. He will enable Chancellors of the left who wish really to attack the problem of poverty to make a real impact on the problem and not be frustrated, not so much by will but by defects in the machinery and system.
I note with pleasure, therefore, the Chancellor's positive recognition of the principle that the State must play a part in redistributing income. There is a parallel here in the redistribution of capital. The National Insurance Scheme could be used to make this a more genuine property owning democracy, which hon. Members on all sides of the House want to see. I recall my friend Mr. James Griffiths telling me how he wanted the National Insurance Scheme to provide modest dowries, for example, to women on marriage. The death benefit, which has remained unchanged for many years, could be substantially increased and used, for example, to provide small capi-

tal sums to families of the deceased over and above the costs of the funeral.
But again, the tests of a Chancellor's egalitarian principles are not his long-term plans but what he does now. Here I regret that we are dealing with a Tory Chancellor. Accepting that we all welcome the increase in the personal allowance and the pension—though this could be paid much faster—the fact remains that the higher income groups will manage the inflation much more easily than the pensioner and the small income earner.
Therefore, I make a concrete suggestion to the Chancellor. If he really believes in integrating social service benefits with income tax and thereby reducing the number of means tests, let him postpone the Housing Finance Bill until he can incorporate it—this is a serious suggestion—within a more egalitarian general tax and social benefit system. That is the logic of what the Government are proposing. After all, two years is not such a long time, historically, to get the right answer; and it would engender much good will. Economically, good will is worth winning. Some economists tend to underestimate the value of a sense of social cohesion. But the Chancellor spoke strongly on Tuesday about the need for income restraint. If his words were not meant as mere rhetoric he is counting on a sense of fair play within the community. He can secure that only if he is sure that he has first made all the effort he can himself.

7.5 p.m.

Mr. R. A. McCrindle: I find myself surprisingly close to a number of the remarks made by the hon. Member for Dewsbury (Mr. Ginsburg). He will find that I shall cover some of the same ground in my speech.
If we were ever to write an epitaph to my right hon. Friend the Chancellor, the word "reformer" would surely be very close to the top. So, too, would the phrase "tax simplifier". In the last two years we have seen the merging of income tax and surtax. We are on the verge of the abolition of purchase tax and S.E.T. Those two taxes are to be replaced by what I can only describe as a surprisingly simple value-added tax. I am among those who have, perhaps, been less enthusiastic in supporting V.A.T., almost


entirely because of the complications I anticipate. To a very large extent the White Paper published two days ago eliminated some of my fears.
Moving on from those reforms, we are now given a glimpse of two future moves, both of which I want very warmly to welcome this evening. First there is the suggestion that we might have an inheritance tax in place of estate duty; and second, there is the possibility of a merger of P.A.Y.E. and the social security system. I should welcome the ending of estate duty. I speak as one who, in a certain way, has had a considerable amount to do with estate duty over the years. However, my hon. Friends who have indicated to me that they see a period ahead when tax on capital will be abolished completely are flying in the face of reality. For as far ahead as one can see, our tax system will be divided between taxation on income and taxation on capital. I suspect that the replacement of estate duty by an inheritance tax would undoubtedly be a move in the right direction.
Estate duty now brings into the net many people to whom it was never expected to be extended. The fairly average person living in the south-east of England in a fairly ordinary house, with perhaps a few shares and a few hundred pounds in the bank, and with probably a pension scheme which pays a death benefit of a sizeable amount, perhaps three to five times his annual salary, is well and truly in the estate duty net—certainly before my right hon. Friend's proposals. Therefore, I welcome very much the lifting of the estate duty threshold. But as I look at the possibility of an inheritance tax replacing estate duty, I am not sure that there should be a wide disparity between the tax charged on beneficiaries who are members of the family and that charged on beneficiaries who are not.
I am a considerable believer in the wider distribution of wealth. I want to encourage rich people to disburse their wealth over a much wider area than they have been inclined to do previously. I will accept that those members of a family who are dependent on a deceased person have a right to expect a preference. I am not sure that it would be right to make this a large preference if we are to pursue the idea of encouraging a wider distribution of wealth. In other

words, I want to see this distribution of wealth but I want to see it by incentive to disburse and not by the confiscation which has sometimes seemed to be the objective of the party opposite.
I turn for a few brief moments to the possible merger of P.A.Y.E. and the social security system. I welcome this prospect. I welcome it especially because I see in it a much more direct and easy method of assisting the poor. I believe it is also a method whereby the proliferation of means tests—which has been recently mentioned in this House—could be concentrated into the one means test to which we are all subjected at this time. I should warn the House that I cannot conceive of any move in this direction which would provide a simple and uncomplicated process. I see, too, a considerable burden being added to the wages staffs of employers.
I want now to make a few comments on other aspects of the Budget, first on investment incentives. The question everyone asks himself is whether we have done enough. I believe that on balance we have indeed done enough about investment. We have tried to underline to industrialists not that we are in for growth simply for this one year but that we hope to be embarking on a period of sustained growth.
I am glad that in the shape of corporation tax concessions and the like we have turned our attention principally to the small firms. I suspect that hon. Members on all sides of the House will have had the same experience as I have had in finding that the depression which has been experienced by industrialists has been experienced in even greater measure by the smaller firms. I wish to welcome the indication given by my hon. Friend the Financial Secretary to the Treasury that the preference on corporation tax to small companies is to be extended to the building societies. This takes note of the fact that these really are what I might call semi-social institutions. As a lifelong supporter of the building society movement, I would perhaps feel that in the light of this preferential treatment, and in the light of the fact that funds are flowing into the societies coffers very quickly indeed, perhaps the time has really arrived when the societies can make a small contribution to reducing the cost of housing by considering a reduction in their rate of interest.
While on the subject of house purchase, I should like to express my disappointment that my right hon. Friend did not see fit to do away with some of the remaining duties which stand in the way of the young owner-occupier. I recognise that over the years a great many of these have been put aside or the floor has been lifted. The fact is that to buy a fairly average house in the south-east of England is to buy a very expensive property indeed. Any contribution that my right hon. Friend can still make in that respect will be warmly welcomed.
I should like to say a word now on the question of allowing tax against interest. In addition to the qualification which my right hon. Friend made during his Budget speech on Tuesday, there are one or two practices which were prevalent before the situation was changed which, as one who was professionally involved at the time, I should not wish to see return. Perhaps my right hon. Friend and I might on some occasion discuss these rather technical matters.
In general, however—and this will not please hon. Members opposite—I welcome the decision to restore those allowances against tax. I foresee in particular that there will be a number of parents who will wish to borrow money to send their children to fee-paying schools. While I quite understand that hon. Members opposite will find this disagreeable, I personally find it difficult to disagree with a situation in which a man, having paid his rates and taxes to send his next-door neighbour's child to a State school, should not be assisted in some small way if he is prepared to make the sacrifice of borrowing to send his own child to a private school.
Finally, I turn to the broad strategy of the Budget. There can be no doubt that one of the words rightly used to describe the strategy is "bold". The balance of payments will be under some pressure before too long a period has elapsed. I do not feel that the balance of payments should be seen as a sacred cow or virility symbol. I believe that the fact that we have a strong balance of payments is something to work on to achieve some of the objectives outlined by my right hon. Friend in his Budget. I believe that the Budget very closely meets the needs of

the hour. It realises the great need for industrial expansion. It understands the requirement to reduce unemployment, to sustain growth and, above all, perhaps to return a large degree of confidence to employers and to employees.
I conclude by saying, without being accused of using clichés, that this is truly a Budget with something in it for everyone, but a Budget which expects the people to respond.

7.15 p.m.

Mr. Gerald Kaufman: It is not surprising that the hon. Member for Billericay (Mr. McCrindle), as a Conservative, should welcome the Budget which he regards as helping to perpetuate divisions in this nation and further to create two nations. It is perhaps a little novel of him in doing so to present the cow as a virility symbol.
I judge this Budget on the simple question of how it affects my constituents in the Ardwick division of Manchester. Looking at the proposals which the Chancellor made on Tuesday afternoon, I can think of very few of my constituents who will benefit from the £300 million being given away in concessions to the top tax payers, and concessions on unearned income. I can think, again, of very few of my constituents who will benefit from the £68 million worth of concessions on estate duty, as distinct from the estate duty concessions to widows which I naturally welcome. I can think of very few of my constituents who will rush out into Stockport Road or Wilmslow Road and buy, if they can find shops which sell them, fur coats and perfume as a result of the cuts in purchase tax.
Nearly one in five of my constituents are retirement pensioners, and they will be bitterly disappointed by the mean and stingy pension increase of 15s. a week which the Chancellor has announced will not be paid until the autumn and which will be half eaten away by inflation by the time they eventually receive it. I can think of a couple who came to see me only the other day—a proud couple who refused, wrongly in my view, but nevertheless it is their view, to apply for supplementary benefits. They refused to apply for rate or rent rebates. They merely wanted the retirement pension


which they have earned on their contributions. That couple will get the £1·20 extra and no more.
It is perfectly true that every income tax payer will benefit from the £1 a week income tax concession. Two-thirds of my constituents are tenants, either of private landlords or of Manchester City Council. When the Housing Finance Bill comes into law, those of my constituents who are council house tenants will get their £1 income tax concession taken right back again by the Minister of Housing and Construction. My constituents who are tenants of private landlords will also have to pay a fine on their income tax concession under what is so ludicrously described as the fair rents system.

Mr. J. R. Kinsey: Is the hon. Member not aware that the people about whom he is talking, those in the lower income brackets, both in council houses and private houses will benefit? He should be welcoming the proposal rather than twisting it in this way.

Mr. Kaufman: The hon. Member for Birmingham, Perry Barr (Mr. Kinsey) lives in a bizarre world where a rebate on a massive increase which leaves the reduced rent higher than the original rent is regarded as some kind of concession. The Prime Minister today talked about 2 million people who will be paid rebates, but they will be rebates which for hundreds of thousands, if not more, will leave the rebated rent higher than the existing rent. If he thinks that that is a concession he ought to ask his constituents who will suffer from it how they feel about it when the Bill becomes law.
The announcement in the Budget which has been most welcomed, certainly by the City of Manchester, is the designation of the rest of the North-West as a new intermediate area, in addition to the existing Merseyside development area and the intermediate area. In making their announcements the Chancellor of the Exchequer and the Secretary of State for Trade and Industry would have been a little more gracious if they had paid tribute to the North-West Industrial Development Association for the pressure it has put on the Government to make this concession. I do not expect them to pay tribute to the Labour M.P.s who

have fought for it, asking Questions and initiating debates about the subject. I asked the Government in a debate a few weeks ago to take this action but I was refused. It would have been a little more honest of the two right hon. Gentlemen if they had acknowledged the stark facts which have made designation of the North-West necessary.
Today's unemployment figures show that in March the North-West has the highest increase in wholly unemployed of any region, and that includes the traditional black spots. The figures show that the North-West is the only region in Britain where the number of adult vacancies has fallen. In the City of Manchester the number of wholly unemployed, already at a disastrous level, has risen again by 216. The percentage of unemployed today is 4·7 per cent. compared with 2·9 per cent. last March. A year ago when the Government's policies were already proving disastrous unemployment in Manchester was 12 per cent. below the national average. Today it is 9 per cent. above. The position in the country has deteriorated and Manchester's situation has deteriorated relative to the rest of the country. We have achieved our objective of intermediate area status but this is not the end of the fight. It is a successful achievement in a fight we shall continue to wage.
I have four specific questions about our new status to which I hope I will be given answers. Since the Housing Bill came before the House last year I have been pressing for an extension to the additional improvement grants, which were available to assisted areas, for the City of Manchester. I was turned down not only regularly but monotonously from the Second Reading of the Bill until the debate we had on local government on Friday. Now, suddenly, improvement grants are to be increased.
The trouble is that Section 1 of the Housing Act, 1971 specifies the starting date for eligibility for the additional improvement grants as 23rd June, 1971. The grants will expire after two years on 23rd June, 1973. The Act specifies that it is possible, by order, for newly designated intermediate areas to qualify for these increased improvement grants. The North-West will have lost exactly nine months of the concession. Only 15months are left to run and we have


great unemployment in the construction industry in the greater Manchester area.
Will the Minister give us the full two-year period which the Act lays down, extending the provisions for the new intermediate areas for nine months until 23rd March, 1974, and give us a fair bite of the cherry?
I come to the question of industrial development. Here again, I have pressed for almost eight months for a concession on the directive which was laid down by the Department of Trade and Industry on 8th July last year. That directive, published in the Journal of the Department of Trade and Industry, laid down guidance for the issue of industrial development certificates as follows:
In Greater Manchester I.D.C.s would be available for reasonable expansion by existing firms with ties to the area, but I.D.C.s would not generally be granted for new projects or for entirely new lines of production or for substantial expansion which could be undertaken elsewhere.
Now that we have been granted intermediate area status is that guidance formally to be withdrawn, and since we are now to become an intermediate area will industrial development certificates be freely available for Greater Manchester?
I should like to ask about assisted area policy as operated within the Department of Trade and Industry and as it will be administered by the Minister for industrial development when he is appointed. A large proportion of the country, in one form or another, will be an assisted area. Will the Minister guarantee that there will be no private or secret administration of priorities which would give one area an advantage over other areas under criteria which are not revealed to hon. Members and others? Will he guarantee that all the new intermediate areas and the formerly designated intermediate areas will be given an equal chance under the new dispensation?
Fourthly, as an intermediate area we shall be given the new building grants, and we are of course very grateful for that, but we are not allowed to have the plant and machinery grants which go to development areas and special development areas. Will the Minister consider giving the intermediate areas a 10 per cent. plant and machinery grant as against the 20 per cent. grant for development areas? This would take us back to the

relative position we had under the investment grant system. The Government having bitten on that bullet, I hope they will now agree to give us a plant and machinery grant, which would increase the incentive attraction of Manchester now that it has intermediate area status.
The Government in the course of the past few months, and particularly the past few weeks, have changed many of the policies upon which they were elected. They are now pouring money by the bucketful into U.C.S. They have brought back investment grants, though under another name, and they have brought back the Industrial Reorganisation Corporation, though in another guise. They have also changed, happily, their policy regarding intermediate area status for Manchester. Their slogan of "Stand on your own feet" should be changed to "Stand on your own head."
We are grateful that they have changed their policies. But we understand why they have made all these changes and why the Budget was presented on Tuesday as it was. Every Conservative Member knows in his heart that it is a Budget of desperation, a Budget of a million unemployed, of run-away inflation, of stagnation. It is a Budget to cure all that. It is a policy of hands to the pumps and excess Tory baggage thrown headlong overboard. The Government, with their record over 21 months of cold-hearted arrogance, do not deserve any success, but for the country's sake I hope we are now at last on the path of growth and full employment.

7.33 p.m.

Mr. David Madel: I hope the hon. Member for Manchester, Ardwick (Mr. Kaufman) will excuse me if I do not follow the line of his speech too closely. Although I was born in the greater Manchester area and worked there, I cannot claim detailed knowledge of it, as my constituency is in South-East England.
In an early part of his long and detailed Budget speech on Tuesday my right hon. Friend the Chancellor listed five reasons why he felt we had a unique opportunity to secure a substantial and faster rate of economic growth over a considerable period of years. I particularly welcome two points from his reasons. The first was his statement that our potential growth of productivity is greater than it


was on previous occasions when we were about to embark on a period of expansion, and the second was his statement that it was not necessary to distort domestic economies in order to maintain unrealistic exchange rates. The commitment to a policy of much faster economic growth has received widespread support. It is particularly welcome in my constituency, where commercial vehicle, car and engineering plants have all suffered from previous stop-go policies.
In addition, industry obviously welcomes the announcement on free depreciation, a policy for which it has been calling for a number of years. We should not feel that the Budget is a complete give-away to employers, because they will face an extra bill for increased social security payments, but I feel that one of the main aims of the Budget was to restore confidence throughout industry and I am certain that increased capital investment will come about due to greater confidence. The 5 per cent. growth rate target implies the prospect of lasting profitable growth, and the fact that the policy on free depreciation is guaranteed until 1977 instead of the frequent changes that have haunted industry in the past will also bring about confidence.
I also welcome very warmly the nationwide initial allowance for new industrial buildings outside the assisted areas. As my right hon. Friend the Chancellor said, this was due to fall to 15 per cent. this April. The fact that it has been increased and extended to the whole economy will be particularly beneficial to certain industries.
Any Member coming from a car-making area such as mine will obviously have a few words to say about value-added tax and the special rate on cars. My right hon. Friend will not be surprised to hear that I am not very happy about this. Some interesting estimates have been made as to what, say, a £1,000 car will attract in tax now and April next year. The tax attraction at the post-Budget rate is £167. Next April, with the car tax of £67 and the value-added tax of £87 there will be a tax rate of £154, assuming no rise in prices in the meantime. Let us remember that labour costs are by no means the only determining factor in the cost to the manufacturer. Steel, electricity and coal are very important indicators. We cannot say exactly what

the value-added tax will be next April, because it will depend on the manufacturers' costs. The gambling machine makers must be breathing a sigh of relief that they did not attract the special tax. The car industry is not too happy about the way in which it has been singled out.
I know that the Government are anxious for public support on their attitude to wage claims, but more could be done to explain to the public exactly what a wage claim would cost if it is granted. Have the Government considered referring some pay claims to the Office of Management Economics, not in a spirit of "Over to them, and let them decide", but merely as a means of obtaining an independent assessment of the true cost of a wage claim?
We heard on a television programme a little while ago that the engineering unions were asking for a 40 per cent. increase. All sorts of wild allegations and accusations were made of what it would or would not mean. Such a claim could be examined carefully. I do not believe the public really know what is being asked for by the unions and what it would cost.
I hope that the Chancellor will consider reducing the special car tax if at any time he feels that the domestic demand for cars has been distorted by an unrealistic tax rate.
While on the subject of value-added tax, I should also like to ask my hon. Friend the Minister of State to clarify the point about zero rating on advertising in newspapers. I immediately declare a financial interest in publishing. We are told that newspaper advertising will attract the zero rate. Will that also apply to advertising in magazines, periodicals, journals and directories? The publishing industry is interested in this and would be grateful to hear a little more about it.
The Chancellor's strategy of sustained economic growth depends to a great extent on industry's ability to keep costs steady. I know that my right hon. Friend will have the situation under constant close review. It lies in his power between now and next April to reduce indirect taxes further, and take some more pressure off prices. Obvious candidates are fuel oil and petrol. I sometimes feel that we forget how dependent


the country is economically on the motor industry, how much it costs to run a car, and how the price of petrol reflects itself so much in prices in the shops. I hope my right hon. Friend will not hesitate to act on this tax if he feels that the movement of costs and prices warrants such action.
If we are to move quickly to our growth target of 5 per cent., we must ensure that our factories are free from stoppages and industrial discontent. I very much welcome the talks which have begun, and which I hope will continue on a regular basis, between the Government, the C.B.I. and the T.U.C. But so much of the responsibility for industrial peace rests with management. Coinciding with the Budget, my constituency heard the good news of a return to a five-day week in the truck plants of both Vauxhall and Chrysler. When the management at Dunstable announced this return to a five-day week it said:
During this period"—
the period of a three-day working week from 21st January—
management have been conscious of the problems employees have faced, and express their appreciation of the tolerance, co-operation and understanding displayed by everyone.
If management on a nationwide basis can get the tolerance, co-operation and understanding of organised labour, that plus the Chancellor's welcome measures will surely mean that we can attain the magic 5 per cent. growth rate.

7.40 p.m.

Mr. James Bennett: I am grateful for the opportunity to say a few words although they will of necessity be of an ad lib variety. I do not rise to castigate the Budget. Rather do I say to the Chancellor with all the passion I can command that I sincerely hope that this Budget achieves the hoped for results. I come from the City of Glasgow, which has an intolerable unemployment situation. In 1969 the unemployment figure was 21,000. Today it is 44,000. If this Budget can do anything to alleviate distress in that great city, I welcome it 100 per cent.
Most of the criticism of the Budget has been not so much about what is in it but about what has been left out. I share the concern of many that little or nothing

has been done for workers who do not earn enough to pay income tax. It is also said that here is not enough for our older citizens. In all honesty I have to say that no matter what Government are in power, when an increase in pensions is announced it is never enough and I doubt whether it ever will be. Similarly, when an increase is announced for a set date the criticism is always made that it should be given earlier. I do not want to make any party political point on this because it is a fault of all Governments. In this climate I try to be realistic and I fervently hope that the Budget will achieve what it sets out to achieve.
During my travels I came across an old cutting which I would like to quote. I am doubtful about the reference but it is alleged to have been made about 50 years ago by one of the political greats, David Lloyd George. It refers to our older citizens and it says:
How we treat our old people is the crucial test of our national qualities. A nation that lacks gratitude to those who have honestly worked for it in the past while they had strength enough to do so does not deserve a future for she has lost her sense of justice and her instinct of mercy.
In my lifetime in politics I have never known any Government or party to measure up to the sentiments expressed in that quotation. I sincerely hope that if this country reaches the growth rate anticipated in the Budget, not just one section but all sections of the community will benefit, particularly those most in need.

7.45 p.m.

Mr. Kenneth Baker: I should like to welcome the hon. Member for Glasgow, Bridgeton (Mr. James Bennett) to our economic and financial debates. It is a great pleasure to follow him. I am not surprised that he gave a general welcome to the Budget because coming as he does from Glasgow he knows that there can be few cities in the whole of the country that will benefit so much and are benefiting from the action taken by the Government.
I express general support for the Chancellor's Budget judgment. The Budget judgment was to go for expansion, and essentially this was correct. It was correct because last year was a year of sluggish growth—about 1 per cent. of the gross domestic product.
Furthermore, if one studies Table 4 in the Financial Statement one can see that there has been a slippage in the expectation of growth in the last year. When the Chancellor introduced his July measures he was talking of growth from the first half of 1971 to the first half of 1972 of about 4 per cent. to 4½ per cent. Table 4 shows that that has slipped, largely due to the coal strike, to something in the region of 3·9 per cent. This reinforces the Chancellor's judgment to go for growth. I hope that he will be successful in obtaining a 5 per cent. growth over the next 18 months.
I also support the method used by the Chancellor of injecting something like £1·2,000 million into the economy. He has done it in such a way that the demand effect is very high. A lot of that money will be spent quickly. This is not a rich man's Budget, because the greatest amount of tax relief goes to the average earner and the person who earns either £5 above or below average earnings. That is the wage level of the mass of the working community. By cutting income tax here the demand effect is concentrated. To some extent this is a psychological judgment. I do not think that much of the £900 million cut in income tax is likely to be saved. A large proportion of it will be spent and that, after all, is the Chancellor's object. That money will be in circulation in the first week of May and the slightly disinflationary effect of the higher insurance payments will not come about until September.
The effect of these is very small because the average wage earner will have to pay an extra 5 new pence on his stamp so he will still benefit to the extent of 95 new pence. That means there will be a strong follow-through of money going into the economy, agitating and increasing economic activity.
Hon. Gentlemen opposite have said that this does not assist the working man yet we have taken 3 million working men and women out of tax altogether—the largest number of people ever taken out of the tax bracket in any Budget. I support the Chancellor's Budget judgment completely. It is fully justified. For the rest of this year the inflation effect is £1·2 thousand million but if hon. Members add up the columns on page 20 to see what the effect will be in 1973–74 in a full

year, if these measures remain, the amount is £2,000 million.

Mr. John Roper: Mr. John Roper rose—

Mr. Baker: I should be glad to give way but I would point out that before the hon. Member came in I made the point that not the whole of that was demand.

Mr. Roper: I did not hear the first part of the hon. Gentleman's remarks. As well as the inflationary effect on the tax side there is the reflationary effect on Government spending announced yesterday and today.

Mr. Baker: Indeed, and that supports my argument and the Budget judgment. The great danger that the Chancellor has decided to run in his Budget judgment is that if we go for expansion like this in 1973–74 we may run into a grave balance of payments crisis. I think it is possible that we will and therefore the words of the Chancellor in column 1354 are possibly the most important words in the Budget and possibly the most important words ever used by a Chancellor since 1945.
He said that we are going for domestic growth and if we get into trouble because of a balance of payments crisis this will not distort the domestic economy. That is one of the most important economic statements since the war. It means that the Government have learnt the lesson the previous Conservative Government and the previous Socialist Government did not learn. From 1964 to 1967 the previous Socialist Government decided not to adjust the exchange rate and as a result clamped down on the economy with long-term damaging effects. The Chancellor said:
Moreover I am sure that all hon. Members in this House will agree that the lesson of the international balance of payments upsets of the last few years is that it is neither necessary nor desirable to distort domestic economies to an unacceptable extent in order to maintain unrealistic exchange rates…".—[Official Report, 21st March, 1972; Vol. 833, c. 1354.]
This is a major breakthrough. Many of us have pressed the Chancellor and the previous Chancellor to say this. It means, I hope, that we shall move into a period where domestic economic growth will be continuous and sustained.
I utter a word of caution about the expectations the Budget will have of


reducing unemployment. From 1966 this country has been literally in a different ball game. The old pattern of unemployment since 1945 of 1, 1½ or 2 per cent, was susceptible to fine tuning—put a bit in the Budget, take a bit out. One then had Budgets of £100 million or £150 million. Those days are gone.
There are long-term changes happening in our economy—the unemployment of progress. We have all experienced in business and in our constituencies technological change and structural change. Managements, whether of collieries, farms, large firms or small factories are all combing through pay-rolls trying to find a more efficient way of producing more goods. The forces of shake-out are very strong in our society, and they will not be countered, met or reduced to any substantial extent by massive demand inflation. In the next 18 months I do not expect unemployment to fall much below 750,000 or 800,000.
Those people who say that what manufacturing industry sheds service industry will take on must also be aware that service industries are equally receptive to shake-out and productivity improvements. I will quote one example of this. The same number of people in 1970 worked in hotels, catering and restaurants as worked in those occupations in 1960. After a decade of tourist boom and of hotel building, exactly the same number of people worked in that industry. I ask my right hon. Friends not to be sanguine in the belief that we can jack down unemployment, because the unemployment of today is an essentially different animal from the unemployment of the 1920s and 1930s.
The proposals in the Budget for corporation tax were submitted to a distinguished Select Committee which came to some very distinguished conclusions, and I am glad that they were accepted in full. Those conclusions were unanimous and I regret that the Opposition have decided to mount a substantial attack upon this part of the Finance Bill. The reform of a fundamental tax like corporation tax is much better done with a degree of unanimity. This will be largely fought out in Committee I suspect and we shall go through many of the arguments again.
Irrespective of our entry into the Common Market I have for a long time been a supporter of value-added tax. It is the only tax on the fiscal horizon which has a real buoyancy of revenue in it. The only other tax that is buoyant at the moment is income tax. The yield of V.A.T. to the Treasury will go up as economic activity goes up. The Treasury Bench is to be congratulated on devising a scheme of V.A.T. which is unlikely to be regressive. Hon. Members opposite who opposed V.A.T. from the beginning would have mounted a much more effective campaign against it if it could have been shown to be regressive in effect. My reading of the White Paper on value-added tax is that it is unlikely to be regressive and the Government are to be congratulated upon that and upon achieving one rate of V.A.T. I never thought that the Treasury would have the courage and sense to have one rate of V.A.T. This makes the tax impartial and we get away from those phoney decisions on which goods are luxury, less luxurious, more necessary or just necessary.
The estimated yield of V.A.T. according to the Financial Statement is £1·6 thousand million. It replaces two taxes, S.E.T. and purchase tax, the yield of which is £2,000 million at the old rate of S.E.T. Taking the first year of operation of V.A.T., there is evidence that we have reduced direct taxation by about £400 million.
I will turn briefly to the positive tax credit system. I welcome this change of heart. It is a change of heart because Treasury Ministers were very cool about negative income tax—

Mr. Patrick Jenkin: Mr. Patrick Jenkin rose—

Mr. Baker: I have worked on committees on this in the past with the Financial Secretary and he has always shown great interest in it, but there has been a slight coolness in atmosphere over the last year or so. I did not have the feeling that we should move to this great reform—

Mr. Patrick Jenkin: I should like to dispel my hon. Friend's suspicions in this regard. Neither I nor any of my colleagues have ever been other than keenly anxious to find a solution which has baffled successive Governments for many


years. There has never been any opposition to this, and, like my hon. Friend, I am delighted that we have solved this problem.

Mr. Baker: I am glad of that. The impression was given that a solution would be difficult to find.
Before the debate is over I hope that someone from the Treasury Bench will be generous enough to congratulate my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams). He has soldiered on, a pariah, an outcast and even—the highest term of political approbation—a crank, in standing by the scheme that his mother and he worked out. Treasury Ministers should not be grudging over this. When they say that it is not quite the Rhys Williams scheme, there have been many Rhys Williams schemes and this is very close to the latest one. He wrote an article which came out only last week—I did not realise that Budget proposals could be fashioned so quickly—that set out the Government's scheme.
The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) in his speech yesterday gave a welcome to the Budget which was rather less than fulsome. I suspect it was less than fulsome because he is engaged on a great political crusade in the Labour Party, the object of which, I understand, is to bring him and his devoted followers out of the saloon bar into the public bar. If he achieves that, I hope when he blunders with his devoted followers into the public bar he will make sure that he does not get into the line of fire between the dart throwers and the dart board. He will find that some of his colleagues in the public bar of the Labour Party are not only wild men but have a deadly aim.
He was rather less than fulsome in welcoming these proposals because, I suspect, in his second great speech to the country he would have talked about negative income tax. I am not surprised that the right hon. Gentleman has not been here today because I suspect his third speech would have related to the need for a new regional policy. I suppose he is having to give a little more thought to a rethink in the Labour Party.
Finally I turn to regional policy. Opposition Members had something of a

field day yesterday in reminding the House of some of our words in the last Parliament. I think it was Sir Winston Churchill who said that one's own words are a wholesome diet, and I would not entirely disagree with that. Some hon. Members ought to do a charitable act by going to the Library and borrowing on permanent loan the Hansards for the whole of the last Parliament so that neither side could be quoted.
I very much welcome the rethink on regional policy which has been carried out by the Conservative Party. I have never been one of those in the Conservative Party who believe that one can ignore the regions and let the workers and society slowly filter to the South and South-East. There is a great deal of logic in taking the jobs to the people, rather than letting people find their way to jobs in the West Midlands or the South-East. A party that maintains a devotion to the concept of one nation cannot afford to see a large part of the country become subject to endemic decay and do nothing about it. Therefore, I entirely welcome the Government's initiative on regional policy.
I welcome the fact that we are to have a Minister who is to be responsible for this work, and I also welcome the fact that there is to be a stability in the incentives until 1978. May I make a suggestion to my right hon. Friend the Chancellor of the Exchequer on the question of regional policy? The suggestion is that if our regions are to become vital and active sources of economic growth, a great deal of it must be spontaneous within the regions. I therefore hope that in the organisation which is to be set up great emphasis will be laid on the regional committees and organisations. We shall not create regional invigoration from Whitehall in London. I hope that real teeth will be given to the regional committees which are envisaged in paragraphs 43 to 45 of the White Paper.
It was one of the features of the last century that the House of Commons was full of Conservatives and Liberals who had built up their own businesses in their own areas. They were Victorian entrepreneurs who had gone into politics. Robert Peel to the end of his days always spoke with a broad Lancashire accent. But this century has not produced the same regional entrepreneurs. I do not


know whether it is a second or third generation problem, but it is a fact. In the new regional rethink we must create initiative within the regions. We must leave more decision-taking to the fringes so that greater spontaneity is found there.
I very much support the Budget. I believe that the Budget judgment was correct and has a very good chance of succeeding. If it succeeds, it will be the first time since 1945 that we shall enter a period of reflation without excessive inflation. I revert to what I consider to be the most important economic statement made in this House since the war: the fact that the present Chancellor of the Exchequer has learned the errors of previous Chancellors and is not prepared to sacrifice the wealth and prosperity and well-being of the people of this country for a totally unmaintainable foreign exchange rate.

8.4 p.m.

Mr. John Roper: I agree with a good deal of the remarks of the hon. Member for St. Marylebone (Mr. Kenneth Baker) although, as I shall show, there are some parts of his speech with which I disagree.
Like the hon. Gentleman, I served on the Select Committee which examined the corporation tax and I was pleased that some of our recommendations were accepted by the Chancellor of the Exchequer in his Budget Statement. It was a fascinating Budget and, like last year's, one cannot complain about its dullness. There is once again a whole series of interesting tax proposals which no doubt we shall be considering in much detail in Committee either upstairs or on the Floor of the House. I am reminded of the old Chinese curse "May you live in interesting times." That applies to those in this House who are interested in finance matters, because if one lives in the time of interesting Budgets this inevitably means that more time has to be spent discusing Finance Bills upstairs in Committee.
Like many hon. Members who have spoken in this debate, I was particularly interested to hear reference in the Chancellor's speech to the study undertaken by Mr. Cockfield and the proposals which are to be set out later in a Green Paper to link social security benefits with

P.A.Y.E. It would be interesting if we could be told when those proposals will come before us and whether the Chancellor will act on them in next year's Budget. If, as has been suggested in the Press, the proposals are not to be published until July, my experience of the Select Committee on Corporation Tax suggests that a Select Committee of this House would not have time to consider such proposals and to make recommendations to the Chancellor in time for him to take them into account for next year's Budget. Therefore, a period of 18 months to two years would be far better spent on this subject than attempting to cover this important matter in time for next year.
There are snags involved in the proposals referred to briefly in the Chancellor's speech to combine P.A.Y.E. on a non-cumulative basis with social security benefits. This could cause hardship to those involved in industrial disputes, but general problems are involved for those with fluctuating incomes. I hope that experience in Australia, where there has been considerable difficulty on the part of those with fluctuating incomes, has been taken fully into account in the proposals which are to appear later in a Green Paper.
I was unable to agree with the remarks of the hon. Member for St. Marylebone about the Budget judgment. Unfortunately, this year the Chancellor of the Exchequer appears to have been particularly coy in that he has not yet told us what will be the demand effect of the tax changes and public expenditure changes which have been announced over the last three days. For example, we do not know how much additional expenditure there will be on industrial expansion. When my hon. Friend the Member for Greenock (Dr. Dickson Mabon) asked the Secretary of State for Trade and Industry how much would be available for selective assistance via the new Industrial Development Executive he was told that he would have to wait for the Bill, which presumably we shall not see until after Easter.
We do not yet know how much of an effect the whole group of Budget measures will have on demand. My guess is that it will be somewhere around £1,200 million or £1,300 million to be taken into account in terms of expenditure measures


as well as fiscal measures, of which we have had some details. I suggest that this probably will be inadequate. The Chancellor of the Exchequer has underestimated each time he has attempted to make a Budget judgment of this sort. The recently published statistics of industrial production and consumer sales, and today's figures of unemployment, show that there is as yet no real sign of recovery. I fear that once again the Chancellor has grossly under-estimated the needs of the economy and that we shall see no sign of an improvement in unemployment during the next 12 months.
Like the hon. Member for St. Marylebone, I should like to say something about corporation tax. I found membership of a Select Committee to be a useful experience and I am glad that the House will be discussing the Cockfield Report on P.A.Y.E. and combinations of social security benefits.
However, it is important to point out that the Select Committee on Corporation Tax was not asked to consider whether it was right to change from the present system of corporation tax—the 1965 system—to a new system. Therefore, to some extent the hon. Member for St. Marylebone was misleading the House when he complained about the Opposition now attacking the Chancellor's measures. The Select Committee was given a very much narrower remit. We were asked merely to consider which form of corporation tax was preferable if there had to be a change. We did not set out to take evidence on the desirability or otherwise of a change, nor did we attempt to come to any judgment on that matter. I believe that that is a matter for the House. A Select Committee cannot get involved in the broad political issues which that question raises. I think that the narrower issue of which is the appropriate form of corporation tax was the right sort of subject for a Select Committee and, as the hon. Gentleman said, on that we were unanimous.
I believe that the judgment that we came to after considerable discussion was the right one on balance, despite the warning that we had from the Inland Revenue of the dangers of political erosion which were more likely under an imputation system and which had been less likely under a split-rate system—more likely under an imputation system because it is

much easier to hide political erosion under an imputation system than under a split-rate system.
I am glad that the Chancellor of the Exchequer so far has resisted the pressure put upon him by firms operating on an international basis and has insisted upon the minimum corporation tax charge which we put forward in our report. I suspect that there will be pressures in the future, and I am sure that we on this side of the House will assist the right hon. Gentleman in resisting any attempt to erode the minimum corporation tax charge. The arguments in favour of the imputation system were primarily those of the balance of payments. These, on balance, carried the day.
On the corporation tax changes, perhaps I may say as a Co-operative Member how pleased I was with the treatment announced last night by the Financial Secretary for co-operative societies and building societies. It was agreed by the Select Committee, as it has been by the Chancellor, that their financial structure meant that the normal imputation system would not be appropriate as it should be and, therefore, the position which the right hon. Gentleman has suggested—that there will be a lower charge of something like four-fifths of the full charge—would be appropriate. The alternative certainly appears unjust.
I turn to the question of value-added tax. Though there may be arguments in general in favour of and against such a form of tax in the abstract, I believe that the tax has been introduced in a premature way this year. There will be a great many administrative problems because the Government have pressed ahead so fast before the technical problems have been resolved. What has been said about the non-regressive nature of the tax has also to be examined with a great deal more care. We have not yet had a chance to examine the full effects of such a tax, and I shall want to consider some of these points this evening.
In an intervention during the speech of my hon. Friend the Member for Willesden, West (Mr. Pavitt) on Tuesday night, the Financial Secretary suggested that there would be less value-added tax for the next year than the purchase tax and selective employment tax forgone. That is true if one takes value-added tax as against S.E.T. net and purchase tax.


But the hon. Gentleman left out of account the £125 million of car tax which will also be charged next year for the first time and which must be taken into account if one wishes to make a calculation. If one adds together the £224 million net yield of S.E.T. forgone next year and the £1,275 million of purchase tax and sets them against the £1,475 million of value-added tax and the £125 million of car tax, there is a £100 million increase in indirect taxation next year.
If one not only considers the addition to indirect taxation but looks further up page 28 of the Financial Statement at the reductions in direct taxation which are already predicted for next year and which will be highly regressive because of the unified system, largely going to those with investment income, next year's Budget already will carry out a £500 million transfer from direct taxation to indirect taxation. That is a regressive switch if ever there was one.
Although the system put forward by the Chancellor of the Exchequer for dealing with V.A.T. will cause less administrative costs than some opponents of the change have suggested, there will still be higher administrative costs under this system than under the purchase tax system in the past. V.A.T. is a good tax, for countries which have bad taxpayers. On those grounds, it is not necessary to introduce it in this country at this stage.
I still believe that the number of items which are to be zero-rated could have been extended considerably. We are told about the non-regressive nature of this tax. However, if one looks at other items which could have been included at zero rate, there are a considerable number. In the area of clothing and footwear, for example, children's clothes and children's shoes for the first time will be subject to a form of indirect tax. As an hon. Member representing a Lancashire constituency, I am especially concerned since the proposals for value-added tax will bring clogs into tax for the first time. Until now they have been exempt from any form of indirect taxation, apart from the element of S.E.T. falling on their distribution. But clogs and wigs will fall into the V.A.T. net in future, not to mention, on those occasions when Her Majesty sees fit to decorate one of her loyal subjects, the decorations, medals

and miniatures which will also be subject to tax where they have not been in the past.
It is the parents of young children who will be specially hit. Babies' nursery furniture has been excluded from purchase tax in the past but now will become subject to tax at the 10 per cent. rate. A large number of household items which are basic needs of life, like household brooms and mops, cooking stoves, Vim and other forms of domestic cleaner, will all become subject to tax for the first time.
This is a degree of regressivity which must be calculated. We have seen already that even within the exemptions and the zero ratings included in the Bill there is room for a great deal of exploitation. The fitted carpet system has been discussed already in the Press. Central heating systems, which until now have not been subject to purchase tax, will be subject to V.A.T. unless they are installed at the time that houses are built. Until now children's swings have been exempt from purchase tax. They will become part of V.A.T. So will miners' lamps, caravans, toothbrushes and a host of other items.
There is one area which causes great concern. While it might be considered reasonable to bring into tax meals which are eaten out in general, meals in canteens will also be included under V.A.T. I hope that the Minister of State will be able to tell us what is the position about school meals. From my reading of the White Paper and the draft Clauses, it looks as if school meals will also be subject to V.A.T. The same probably applies to school milk in those places where it is now sold. These, too, will come under value-added tax.
For hon. Gentlemen on the Government side to say that this is not a regressive measure when all these basic needs of life will come into taxation for the first time strikes me as ludicrous to say the least. In Committee we shall want to probe these and many other items which I believe should have been zero-rated if we were to introduce a tax of this kind.
I turn now to the Chancellor's proposals on regional policy. I was very interested in them and welcome the fact that my constituency has been included in an intermediate area for the first time.
We are all waiting to see what will be in the Bill which the Secretary of State for Trade and Industry is bringing forward. We want to see the precise measures which he wishes to introduce. At the moment this looks like an operation of changing the labels on the doors in No. 1 Victoria Street. I trust it is more than that. At the moment it does not look as if it need be much more. We shall see what it implies when we get the legislation in due course.
The most important thing which the Chancellor could have done about regional policy he failed to do. He failed to give any clear indication of what is to happen to the regional employment premium after 1974. This instrument has been shown to be of value in creating jobs and maintaining employment in development areas. The present ambiguous and unsatisfactory form of words in the Chancellor's speech and the greater degree of ambiguity in the White Paper which has been issued should be remedied in the near future. I believe that firms going into development areas should have a clear indication where they stand regarding regional employment premium.
The Budget has technical fascination but it does not go far enough to deal with the economic problems of the country and it worsens considerably our social problems.

8.22 p.m.

Mr. David Mitchell: Before the Chancellor rose to make his Budget Statement I gave some thought to the things which I hoped would be included in it and I made a list. I thought that afterwards I would check off that list to see what progress had been made. My list went as follows: that value-added tax must be simple; that there should be measures to reduce unemployment; that there should be encouragement to industry to expand, not just to invest, because quite often investment means spending money to put in machinery and save jobs; that there should be special measures to help seize the opportunity in Europe; that there should be measures to halt the rise in prices; that there should be protection for the poorest in the land from hardship; and, in particular in that sphere, that the problem of the widow and the widow's home should be recognised.
Therefore, when the Chancellor of the Exchequer sat down, although perhaps I was not one of the first to rise and cheer, I found much in the Budget with which I agreed and welcomed. However, I also found some aspects about which I have some concern and reservation which I feel I should express to the House.
First, value-added tax. I congratulate the Chancellor on the simplicity of what he has done. Indeed, I am particularly glad to see my hon. Friend the Minister of State, the hon. Member for Worthing (Mr. Higgins), on the Government Front Bench, for I believe that he has done much of the back-room work which has produced this form of value-added tax.
What a nightmare it would have been if we had had multiple different rates which they have in some countries. That would have created a problem especially for the small business in the country—I take a special interest in this sphere—which an accountant in my constituency has referred to as "out in the sticks" where the keeping of records may leave something to be desired. Trying to keep the input tax, the allowance side of the value-added tax, would have been an absolute nightmare if we had different rates for different purchases. Therefore, I welcome the form that has been chosen.
I particularly welcome the 10 per cent. rate, which is the lowest in Europe. The House should recognise that we have an enormous benefit in having only a 10 per cent. rate. Therefore, hon. Members who have already started to queue up with groups of exemptions which they would like to see from the tax and extension to zero rating should take a realistic view and say to themselves: "If we are to have a 10 per cent. rate, we cannot allow through anything more than the very minimum of special cases over and above those which the Government have already set into the Bill."
We are fulfilling the promise to tax more from spending and less from earning, which must be wholly desirable.
I turn now to the problem of unemployment. This is more long term and deep seated than many hon. Members have recognised. It is easy for the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) to say that, despite what the Government have done, they will not reduce unemployment by more than 200,000. That figure is probably correct.


Equally, I beg to doubt whether any Government can do anything within reality which will take more than 200,000 off the unemployed in the course of the next 12 to 18 months.
We should pause to recall the principal causes for the level of unemployment today. We have had for some time—in fact, since 1968—less growth in demand than we have had in the underlying productive potential of British industry. We have had an underlying productive potential growing at about 3 per cent. a year while demand has not grown at that rate.
It was not in 1968, 1969 or 1970 that a Conservative Government were in office. Unemployment doubled under that Labour Government. For hon. Gentlemen opposite to wash their hands and pretend that they had nothing to do with the present situation is plainly dishonest and deceptive.
We must recognise the important part that is played by the long-term trends of employment. One of the signs of a more advanced economy is that manufacturing tends to be static in its employment demand, but that the service industries are a growth area for employment. Therefore, the natural normal growth of employment in this country over recent years should have been in the service industries. But this is the precise area on which the right hon. Member for Cardiff, South-East (Mr. Callaghan), when he was Chancellor, put a tax—selective employment tax—specifically bearing on the service industries.
The right hon. Member for Stechford, when he was Chancellor, doubled that tax. I believe that we should give credit where it is due and recognise that the right hon. Gentleman, ex-Chancellor of the Exchequer, dilettante, connoisseur of good art and good claret, is also architect of much of our unemployment today. [Interruption.] Hon. Gentlemen opposite may say "Come, come", but this is the reality of the situation.
Unemployment did net start to rise when we came to office. It was rising long before. It doubled under Labour. I am not saying that hon. Gentlemen opposite sought unemployment. They pursued measures which had these consequences, and once one kicks that sort of

football hard, as Labour did, with the doubling of S.E.T. by the right hon. Member for Stechford, the momentum carries the ball along, and it has been running forward until now.

Mr. Brian Walden: Mr. Brian Walden (Birmingham, All Saints) rose—

Mr. Mitchell: The hon. Gentleman has already spoken. He will no doubt have another opportunity to speak.

Mr. Walden: Not tonight.

Mr. Mitchell: I welcome the coming demise of S.E.T. I welcome the moves for greater growth because they will do much to deal with the problems of unemployment.
Remember that it is consumer-led growth on which the Government are relying. In this connection I have some worries. I am not wholly satisfied—I make these remarks with care and having given the issue considerable thought—that the increased consumer demand which my right hon. Friend is bringing about will be satisfied by British manufacturers and British industry generally.
There is a grave risk that it will be satisfied increasingly as the year passes by Common Market manufacturers, who will see that if they pre-empt the tariff cuts which will come in future years they can establish themselves in our market here, with a firm foothold at this time of growth in consumer demand. I therefore have some reservations about the method on which the Chancellor is relying so greatly.
We must recognise that industry is a living organism. Older businesses and processes die. They contract and shed employees and thereby add to the pool of unemployment. New industries, new firms and new products are a growing organism and they expand and take on workers. Today we have the shedding of old industries, but we do not have sufficient birth and expansion of new ones.
What is it that new industries need to give them incentive to expand? The answer is, of course, post-tax profit. People are in industry for profit and not for the love of hard work. I hope that the Chancellor will hold in reserve


the possibility of a reduction in corporation tax if he finds this to be necessary later in the year.
I am bound to look with some concern at the proposals in respect of corporation tax and the changes involved in the new system. If we are to have a system in which corporation tax will be heavier on retained profits and lighter on distributed profits—I understand my right hon. Friend's concept in that he wants to see a better allocation of resources, with the use of the market as a means of re-allocating; this is fine and dandy for quoted companies on the market—my right hon. Friend must recognise that for companies which are not quoted on the market, the market is not the place where they reallocate their resources or raise expansion finance. They achieve that through retained profits, which are to be taxed higher under my right hon. Friend's proposed system for next year.
I welcome the fact that the Chancellor recognises that there is a problem in respect of small businesses, which must be treated differently from large ones, but one is bound to ask if my right hon. Friend is aware that the same problem applies to all unquoted companies, small and large. Should they not be given a different form of treatment in relation to corporation tax, since they raise their expansion capital differently? I hope that further thought will be given to this by my right hon. Friend.
The Budget gives no indication of anything in the way of a taper against the level of capital gains tax continuing evenly through the years. At 30 per cent. it is a cumulative disadvantage and disincentive.
As the years go by, the amount of capital gains tax liability which is built up by those who own businesses becomes an increasing disincentive to investment in the smaller companies which finance expansion through retained profits. All the time the proprietor of a small business has to remember that if he puts more money into his business, not only will he pay corporation tax on the profits but, over and above that, there will be eventually rising capital gains tax which he will have to pay in cash.
Many large employers in my constituency will find that such a large liability that there will be an enormous locking-

in effect. The old managing director or working proprietor who ought to retire from his business or to sell it, will have to stay on until he goes to his grave because of capital gains tax for which he has not the cash to pay out.
When I look at the injustice of taxing the paper gain of inflation, I remember my hon. Friend the Member for Worthing speaking brilliantly on this subject when capital gains tax was first put on the Statute Book in 1965. I shall not embarrass my hon. Friend by quoting his words today, but I could not have put the matter better. That no doubt is why he is in his present position. I urge him to bear in mind his own words about the injustice of taxing inflation and paper gains and remind him that since 1965 there has been a rate of inflation which neither he nor I nor anyone on either side of the House foresaw when he was making that speech in 1965. Again and again, the strength of the case he made has been reinforced.
It reinforces the case for a tapering device such as there is in the United States. I do not want to see people who find a way of making a "quick buck" by a capital transaction escape paying tax. I do not believe that is right, but over a long period of time it ought to have an offset for inflation. We should say that the longer the asset is held the less is the rate of tax. If it takes 10 or 20 years to build up a business, we should say that from 30 per cent. the tax should taper off to nil at the end of the period. Then we would do away with many of the injustices and particularly disincentives caused by the tax at present.
It is of crucial importance to this country that our businessmen should seize the opportunities which going into Europe will provide. Joining the Common Market presents an opportunity. It is no more, it is no certainty of growth and no certainty of an extra market for our manufactures, but an opportunity. The Government ought now to be giving help to market research within Europe for British manufactures. If they set up an organisation subsidised by the Government deliberately to help all kinds of manufacturers, particularly small ones who have not the resources to travel in Europe and do market research for themselves, that would do much to bring the


opportunity home to British manufacturers and to ensure that they seize the opportunity rather than our becoming the soft under-belly of Europe in which our market would be exploited by E.E.C. manufacturers.
The Chancellor is to be congratulated on the measures taken to halt the rapid rise in prices. His cuts in purchase tax make a record for all-time, the zero rating of food, fuel and rent, particularly as these things enter into the budgets of old people, in relation to value-added tax are important. Since the economy of this country has been suffering and is suffering from wage-cost inflation, I welcome the £1 reduction in tax, or the £1 increase in wages immediately given to all in the taxpaying bracket. I hope that this lead will be followed by the trade unions who should recognise that, having obtained that £1, there is no need to press for more in inflationary terms in the wage increases for which they are asking at present. Justifiable wage increases can certainly be made, but within the general ambit of what industry can afford and not the sort of inflationary settlements which rob workers, pensioners and society as a whole of stable money and bring inflation back at full cry into the economy.
The pensioners are also to have an increase. Some people have said that it is less than last year's increase, but one must recognise that we now have annual reviews and that with a pound after two years and 75p after one year there is a greater increase on the 75p than the pound last November.
Finally, I welcome the special help for widows, who were so vindictively treated before, returning from their bereavement to face the reality of having to sell house and home. I am delighted that my right hon. Friend has recognised that something needed to be done for them.
There is much in the Budget that I welcome, but there are aspects of it with which I have some concern and I felt it right this evening to draw attention to these and not seek to conceal them.

8.41 p.m.

Mr. George Cunningham: I intend to speak not about the economy in general but about two

particular points arising from the Budget Statement. First, I want to pick up one remark made early in his speech by the hon. Member for Basingstoke (Mr. David Mitchell). He said that we are perhaps all wrong in not recognising—this was his implication—that the number of unemployed is less amenable to change as a result of Government activity than we imagine. I support that view.
The hon. Gentleman suggested that the level of unemployment rose during the period of Labour Government and, of course, it has gone on rising. There is an underlying trend there which cannot be denied and it is to some extent independent of Government action. We have to recognise that two factors govern the level of unemployment. First there is Government action—corporation tax and other fiscal devices of a helpful or unhelpful nature. Secondly, and perhaps more significant, there is the degree of current enterprise or initiative on behalf of the business community.
It may be that what has happened in this country is a long-term decline in the degree of enterprise and initiative possessed or at least currently exercised by the business community—

Mr. David Mitchell: Hear, hear.

Mr. Cunningham: —and that it is not easily susceptible to inducements or enticements by taxation. If that is the case, there is justification for more robust and more direct intervention by public authorities in the economic situation than has been the case in the past. If the business community is not able to make use of 1 million unemployed to produce the goods for the community to consume, the public authorities cannot remain indifferent and must in some way step in. There is no time to develop that point now, but we need to recognise that corporation tax and other fiscal devices are not by any means very direct in their influence on the number of unemployed or on the amount of business activity.
Will the Minister of State be good enough to remove a suspicion which exists, which I think may not be justified but which should be removed? We were told last year that when the change in the taxation system was introduced in a year's time, with the removal of the earned income allowance, it would be necessary to raise the level of personal allowances in


order to preserve their value under the present system of taxation. The Chancellor mentioned that in his Budget Statement last year. Section 33 of the Finance Act listed the personal allowances as they now exist and said that, for the year 1973–74, they would be raised to nine-sevenths of the previously prevailing level. The figures in pound terms were stipulated.
This year the Chancellor has raised the personal allowances to a level which in the case of the married man's allowance is identical with the level to which it would have to be raised next year for the technical reason I have mentioned. The question is whether, in a year's time, the personal allowances will be raised again for that technical reason. The answer must surely be "Yes", but the Chancellor did not say so and the Resolutions do not provide for it. If it is not done, however, he will get back next year, because of this technical change, almost all of what he has given away this year. The "Chancellor's give-away" will become "Barber's boomerang" and he will have it all back again.
I hope that my suspicious mind can be put at rest on that and that the Minister can make it clear that the Finance Bill will provide an amendment to these figures to ensure that they rise to a level which is nine-sevenths of what has now been provided, subject to any small changes which the Chancellor might decide to introduce next year in the normal way.

Mr. Higgins: The hon. Member will appreciate that this is not exactly a simple matter and it is not appropriate to answer it in an intervention in his speech. Since I already have a large number of points to answer in my own, perhaps I might bring this point to my right hon. Friend's attention.

Mr. Cunningham: I am grateful to the hon. Gentleman. I would prefer, if there is any uncertainty, that he should look at the matter carefully and have that point dealt with in some other way.
Finally, I take the strongest exception to the provision in the Budget which restores tax relief on all interest on loans, for whatever purpose the money is borrowed. I know that it was foreshadowed in the Conservative Party manifesto. Goodness knows how it got there. This was surely one case in which the Conser-

vative Party would have been justified in saying that it would not carry out the pledge because it was crazy.
There is no logical justification whatever for giving a man tax relief because he borrows money. The amounts that people borrow may not be large, but it is inflationary to the extent that they employ this device at all and it has no basis in logic. If I choose to spend my money buying a motor bicycle and instead of using my own capital to do so I borrow money, why should that reduce the tax that I pay for community services? I know it is the system which existed up to 1969 but it existed because of an historical situation which has no relevance to the present day.
If the Chancellor had to do this he could at least have rationalised the system by making this an allowance. It is not a tax allowance; it was not a tax allowance before 1969. It was regarded as an outgoing, and I suppose it will still be regarded as an outgoing; and in the nature of an outgoing it will therefore not have any top limit. Consequently people will be able to borrow as much money as their wealth can command—of course, only the wealthy can borrow—and the interest rate will be subsidised out of taxation. The amount of that subsidy to the interest rate they are effectively paying is enormous.
Taking the new rates of taxation and assuming that the borrower is able to get his money for 9 per cent., even on the new basic rate of taxation it will only be costing him 6·3 per cent. Anyone who can borrow money at that rate can make a profit on it because he can invest it with a better return than that even after taxation; and if he is much better off and on a 40 per cent. or 50 per cent. tax rate, he will be able to get his money for about 5 per cent. That is one abuse of the situation which played a large part in leading to the termination of the relief in 1969.
The Chancellor, in announcing the return of this nonsense, indicated that there would be some qualification in one respect. If I understood him correctly, however, he did not indicate that he would be taking steps to preclude the abuse which I now want to mention—that is, the scheme for endowment insurance which is taken out specifically to take advantage of the tax relief on


borrowing. What will happen when this ridiculous provision gets back on to the Statute Book is that anybody with enough wealth to take out a highly expensive endowment insurance scheme will do so. He will take out a scheme with a premium of £5,000 a year and will have enough money to pay the premium for a couple of years. He will borrow all the rest against the endowment that finally matures and will borrow the interest to service that loan. Therefore, what would normally be a highly unprofitable venture if he got no tax relief on the interest will be highly profitable because he will get relief.
There is not a country in the world that permits such an obvious loophole to exist. The Chancellor has committed himself to the return of tax relief for borrowing, but surely this does not mean that he has committed himself to permitting that abuse of tax relief for borrowing. I hope that at some stage, as the legislation goes through, the Chancellor will feel able to say that the abuse must not return and that measures will be taken to prevent tax relief for borrowing for this kind of purpose.

8.54 p.m.

Mr. Robert Boscawen: The hon. Member for Islington, South-West (Mr. George Cunningham) will forgive me if I do not follow his technical argument since I only have a few minutes at my disposal.
This gives me an opportunity, since my hon. Friend the Minister of State is present, to pay tribute to him for the painstaking way he has dealt with representations from small constituencies all over the country in connection with the application of value-added tax. I am highly impressed by the way he has overcome the very difficult problem of phasing out purchase tax into value-added tax, and I also want to congratulate his right hon. Friend the Chancellor of the Exchequer on the single rate for the value-added tax. This is a masterpiece of simplicity. Furthermore, I think that my right hon. Friend is absolutely right in the exemptions he has made, because fuel, fares and food are the main things that affect the elderly and the less fortunate.
It will be necessary to go very carefuly through the zero-rating exemptions in the

schedule of the White Paper. In particular I should like to see group 7—the health exemptions—gone through because I think that the intention to exempt all health appliances and so on is absolutely right. By the time the Finance Bill becomes an Act, I hope we shall make it clear that things such as hearing aids, surgical boots and all the appliances that are very necessary to some people are exempt from the tax.
I have also noted the point recently made about children's shoes. It concerns me that the cost of children's shoes may rise because of taxation for the first time. I quite see that these could not be exempted from V.A.T., but when my right hon. Friend the Chancellor considers such things as family allowances and, in particular, family income supplement, this should be taken into account, because certain factors are very necessary in the case of poorer children of large families. Anyone who has a large family knows how quickly children grow out of shoes.
I am very glad, too, that the protection for those in the greatest need is nowadays taken care of in Budgets. My right hon. Friend's two Budgets have introduced measures to help the pensioners, the severely disabled and others. Though it may not be central to the Budget strategy, it is right that at present, in one of the most important announcements of Government policy, we should announce any measures that can be introduced to help the less fortunate. I disagree with hon. Members on the Opposition side who say that this is a one-sided Budget, that it is divisive and that it is not seeking to help those who are most in need. My right hon. Friend the Chancellor has gone out of his way to single out groups of people who are in need of help and to increase the help to them. The Budget is particularly good in respect of the increase in all the social insurance benefits, not only the pension increase but also the increase for war pensioners and the severely disabled.
As I have mentioned in the House previously, the severely disabled war pensioner, particularly from the First World War, who is also receiving an old-age pension is today well done by in this country. A 100 per cent. disabled war pensioner from the First World War will now be receiving about £22 or £23 a


week. If he is exceptionally severely disabled and is receiving other allowances, he will be getting probably over £30, some of which is not taxed. That is a sign of a civilised country and a civilised way of treating the very deserving few who remain in this category.
The most exciting and interesting Budget announcement was the proposal to look seriously into the tax credit system and the system of a possible negative income tax. This will help to eliminate some of the injustices and oddities that we have had in the past. Even in this Budget we are unable to help those on very low incomes who are not paying tax. Under the new system, however, which I hope will be introduced soon, we shall be able to include those in a Budget of this kind.
I congratulate my right hon. Friend on his aim to make our taxation as simple as possible to understand. Ordinary people want to be able to understand why they are paying taxes and the way they are paying them. That is what my right hon. Friend has set out to do, and he deserves the gratitude of many thousands of people.

9.0 p.m.

Mr. Joel Barnett: Normally when there is a maiden speaker during the course of the debate one congratulates him. This time we do not have a maiden speaker; we have one giving what I might call his swansong. I am sure we all listened with great interest to the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). Speaking for myself, I have always found his contributions to our debates more than worth while. I have also found that his chairmanship of the Public Accounts Committee made my job on that Committee a most interesting and worth while one. We in the House of Commons will miss his contributions to our debates.
There are a number of things I would like to welcome in this Budget. First of all, I wish to congratulate the Chancellor on his proposals for amalgamating the P.A.Y.E. and social security systems. We welcome the setting up of a Select Committee. I hope that we shall have the Select Committee soon and that a great deal will come out of it.
Equally, I want to pay a warm tribute to the historic statement in the Budget that the Chancellor would be prepared to devalue rather than allow balance of payments or an exchange rate to prevent us proceeding to a more sustained rate of economic growth.
As a Lancashire Member I should also like to say "Thank you" for having now included what was not formerly an intermediate area.
I should like to endorse some of the words of my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) and ask the Minister of State to give serious consideration to the important questions which were put to him arising out of what the Chancellor said.
That is about all I am prepared to say by way of welcome to this Budget. I found the Budget devoid of any coherent strategy for the economy. On taxation I believe there is a deliberate and carefully hidden strategy to change the direction of our tax system to benefit those who now have the most capital and income. Then the Chancellor has the audacity to sham surprise that the trade union movement is not prepared to accept his form of incomes policy.
On the question of the economy, with reference to industrial policy—I hope hon. Members will forgive me for describing it as a policy—my right hon. Friend the Member for Bristol, South-East (Mr. Benn) has already exposed the shambles of the Government's industrial policy, and so I will leave it at that.
The monetary policy of this Government is equally in utter confusion. Last year the Chancellor of the Exchequer, to put it mildly, was not at all clear about what the Government's monetary policy was. The Minister of State then proceeded to explain it to us. He explained the difference between a neutral monetary policy and a passive monetary policy. He did not tell us whether the Government were pursuing either a neutral monetary policy or a passive one. He did say it would be a mistake were we to assume that the Government were going to allow a 12 per cent. annual growth of money supply.
Of course, he was perfectly right to tell us that we should not assume that there would be a 12 per cent. growth in money


supply. According to paragraph 7 of the Financial Statement, in the calendar year there was a 13 per cent. growth in money supply. As we know, in recent months the growth has been rather higher than that. This year we have had a further clarification by the Chancellor of his money supply policy. Of course, he has always told us that what he will not do with his money supply policy is simply to finance inflation. We must now expect further clarification from the Minister of State.
If the money supply is not to finance inflation, no doubt the Minister of State will tell us precisely what the Government's money supply policy has been doing during the past year and what the Chancellor has in mind for it during the course of the next year. The Chancellor tells us that his main objective is to get a much faster rate of growth and that he will not be deterred by an exchange rate problem.
Perhaps it might well have been best, if the Chancellor will not be deterred by an exchange rate problem and if he would prefer, as I am sure he would, not to have had a consumer-led boom which is what he has produced in the Budget, to have reduced the exchange rate to 2·40 dollars now and brought about what we really need, an export-led boom, or at least a move in that direction. But the Chancellor has also told us that another of his objectives in addition to a sustained rate of growth is that it should be combined with full employment, although I have never actually heard him use the words "full employment". It would be interesting if the Chancellor would tell us whether that is his policy. As far as I can ascertain he has never actually said that his and the Government's policy is one of attaining and sustaining full employment.
The Chancellor said in his Budget speech only that the present high level of unemployment was unacceptable. He has constantly told us that it is unacceptable and intolerable—he has said it throughout the period when unemployment has been rising—but he has never told us that the Government's policy is full employment. I would be very happy to hear him say it.
I certainly think that a much faster rate of sustainable growth is absolutely

vital. It is equally important that it should not grind to a halt. I recall saying precisely this in last year's Budget debates and that I thought the 3 per cent. level of growth was totally inadequate. I have said that over many years in the House. The Minister of State, in referring to my speech last year, said:
If we attempt to expand at a significantly higher rate than we are planning"—
that was at the rate of 3 per cent.—
what we shall do will be to revert very quickly to stop-go economic policies."—[OFFICIAL REPORT, 1st April, 1971; Vol. 814, c. 1810.]
We now apparently have a 5 per cent. level of economic growth and I am happy to see that we are going for it. But this is consumer-led economic growth, directly opposed to everything that the Minister of State said and everything that the Chancellor has said over the years.

The Chancellor of the Exchequer (Mr. Anthony Barber): The hon. Member is saying two things. He is saying that we should have altered the exchange rate to 2·40 dollars, and secondly, he thinks it wrong to go for what he calls a consumer-led boom. Is he saying on behalf of the Labour Party that we should devalue the pound and not cut taxation so much? That is the logic of his argument.

Mr. Barnett: I am not saying that at all. I am saying that rather than have a wholly consumer-led boom, which apparently the Chancellor concedes is what he is going for, we could have had in addition some assistance to manufacturing industry by reducing the exchange rate to 2·40 dollars. If the Chancellor disagrees with that, I shall be interested to hear him say so. He has done nothing in the Budget to help manufacturing costs.
As my hon. Friend the Member for Dewsbury (Mr. Ginsburg) said, the Chancellor has increased manufacturing costs to a greater extent than usual by the increased national insurance contributions to be paid by employers. If he wanted to do something about manufacturing costs, he could have changed the proportion or even removed completely the proportion which is to be paid by the employer. But he did not, so there is very little in 1972–73 to help manufacturing costs. Indeed, there is nothing that will make industry more competitive.
There is nothing that gives us confidence about the underlying position about which the Chancellor is constantly speaking. There is nothing that makes us convinced that unemployment three years after the Government came to office will be less than 800,000 or 850,000, regrettably. It is quite a reputation for a Chancellor to have. The right hon. Gentleman boasts a great deal about all the other things he has done, but he cannot deny that three years after he took office that is the sad situation we are likely to be in.
I fear that the reflation in the Budget is nothing like so big as it at first appears, as my hon. Friend the Member for Dewsbury said. We may well have underestimated once again the amount of inflation or, to use the new jargon, the fiscal drag. It may well be that even £1,200 million is not sufficient. Unfortunately, because of the lengthy delay before the Government decided that they were wrong 18 months ago, any reflationary effect of the industrial incentives we heard about yesterday will not take effect during the next 12 months. It does not need the Chancellor to be very far wrong in his calculations—and he has not exactly been right in them up to now—for even the level of 800,000 to 850,000 unemployed to be exceeded 12 months from today. If output rises at the rate of 4 per cent., and growth does not quite achieve the Chancellor's 5 per cent. target—if it achieves only 4 per cent.—unemployment will still be 1 million next year. Even if he gets nearer to his 5 per cent. target there will not be very much of a reduction in that level of unemployment. So when the Chancellor and the Prime Minister get so terribly annoyed when they are accused of creating unemployment, what exactly are they complaining about?
The Chancellor cannot deny that what he has done in the Budget is to ensure that there will be a level of unemployment three years after his taking office of 800,000 to 850,000. I should be delighted if he could tell us that that is not to be the case, that his plan is that it will be rather lower, but we all know that is not so. We all know that that is the best we can hope for in 1973.
So much for the Government's economic policy. I turn briefly to their taxa-

tion policy. I believe they have deliberately created a false impression of fairness. We must see this Budget in the context of all their other measures. My hon. Friend the Member for Swansea, East (Mr. McBride) spoke about how the Housing Finance Bill will affect thousands of people in Wales. We must bear in mind the cuts in public expenditure. How miserly the museum charges and abolition of school milk now look in the face of £1,200 million of tax relief! We must also see the Budget in the context of those who have not been helped by it, those who do not pay any tax. What sort of society did the Chancellor think he was creating when he can boast about giving £1 a week to every man and woman at work and 75p for a pensioner, and nothing for those paying no tax at all? This is not to mention those 1 million who cannot find work because of his policies and those of his right hon. Friends.
The main reason why a false impression has been created is the long-term trend of the Chancellor's policies, taking last year's Budget and particularly next year's Budget. Last year I accused the Chancellor of using the unified tax system, which I had been recommending for a number of years, as a cloak with which to hide a move towards a much more unfair tax system. They would not tell us last year what, for example, was to be the slice of investment income to be exempt or what the new scale was to be. Now we have it and now we see how true were our accusations.
The £300 million of tax relief in 1973–74 will go wholly to those earning above £5,000 a year or those with investment income. Those below will pay the 30 per cent. as they pay now. This is where the Chancellor is moving.

Mr. Patrick Jenkin: It may surprise the hon. Member to know that although the individual sums are not very big the reduction in the effective rate of earned income from 30·14 per cent. to 30 per cent. represents between £45 million and £50 million. Although the individual benefit is not big, it is quite wrong to say that the whole lot is going to those to whom he has referred.

Mr. Barnett: I do not know why the Financial Secretary should deny that he is moving towards a more regressive income tax. This is precisely what the


Government have always said they want to do. Now he tells us it is ·14 per cent. He needs to look at the Financial Statement and observe that the top end of the scale is not ·14 per cent. but £500 a year, give in to the taxpayer. I do not know why Ministers seek to deny their moving in this direction. They have always boasted that this is what they want to do.
This year they want to try to give the impression to the trade union movement that they are being fair and that they have changed; they no longer want to move to an unfair tax system. The figures are there and it will surprise no one that the trade union movement can see through them.
That is the general trend. There is another trend, a trend whereby the Government are reverting to the worst type of Conservative policy, a policy of allowing, indeed encouraging, the tax avoidance industry. I can give one guarantee about unemployment—there will be more people employed this time next year in that industry than there are today because he has given it a great deal of increased scope. There are several examples and my hon. Friend the Member for Islington, South-West (Mr. George Cunningham), referred to one of them—loan interest.
This was referred to by the Secretary of State for the Environment who said, among other things, that this would mean a shift away from old-fashioned management. I am sure the Chancellor does not really believe that is what he has done. He and I and anyone else who knows anything about this knows that the bulk of the £7 million relief given under this heading will go to those who will seek to gain from reverting to those schemes with which I will not bore the House but which have been referred to, the types of insurance policy whereby one can make substantial gains.
Then there is the new corporation tax. Last night the Financial Secretary explained this new tax. I pay my tribute to the great reforming Chancellor we have, but I hope no one is under any illusion that this is a simplification.
Last night my right hon. Friend the Member for Coventry, East (Mr. Crossman) whom I have never thought of as being stupid was here. We had what I am sure the Financial Secretary assumed

to be a most lucid explanation of the new corporation tax, but it escaped my right hon. Friend; he could not follow a word of it. I am not surprised, because it is by no means a simplification. Much more important, it will do nothing for the small trading companies for which so many hon. and right hon. Members profess to speak.
The Government have given a great concession to these small companies. Under the new system they will pay corporation tax of 40 per cent. instead of 50 per cent.; in other words, they will pay precisely what they are paying now under the existing tax system.

Mr. Patrick Jenkin: Four-fifths are no longer in the shortfall provision of close companies, and that is a major advance.

Mr. Barnett: The Financial Secretary must not be too clever in talking about the four-fifths. He knows that a large number of these small companies pay no tax at all and never did. Whatever profits they have, if any, are allocated as directors' fees. Let the Financial Secretary not come to me with these percentages. These special preferences for small companies mean that they will be in exactly the same position as they are now, and those with profits in excess of £15,000 will be worse off. They will pay the 50 per cent. rather than the existing 40 per cent.
The Financial Secretary may say that they can set off the tax on the dividends against corporation tax, but how many close companies want to pay dividends to their shareholders? They want to plough back their profits for future growth. This is what we are always being told about close companies. The companies with the biggest profits will pay 50 per cent. corporation tax instead of 40 per cent. I am utterly opposed to this change, and not only for this reason. There are many more reasons which we shall come to in our later debates.
It is constantly being said that the Select Committee preferred the imputation system. This was only because the Select Committee was refused the opportunity to consider the existing system. They considered only two bad systems. I would not accept that the Select Committee preferred the new system to the existing one. There is much more about this new corporation tax—this great


reform—that can be condemned. There is the idea that distribution encourages growth, whereas all the evidence is the reverse. What about the serious economic consequences to savings and consumption? We all know that dividends much more than capital gains will be consumed.
The Chancellor has reduced the cost of dying provided one lives beyond Budget day. The full relief is £143 million—an enormous amount of relief from what would otherwise in 1972–73 have been a total revenue of £480 million. Some of this will go to the lower end of the scale, and I welcome it, but £68 million will go to people other than those who are exempt for the first £30,000.
I should be surprised if the Chancellor assumes that the bulk of the capital gains exemptions through unit trusts and investment trusts will go to the old widow and the little old man with a few pounds. This will cost £30 million. Some will go to the small saver, but a large share will stick to a small number of sticky fingers that will be waiting just to get hold of these lucrative gains handed to them by the Chancellor.
A brief word about value-added tax. The Chancellor has sacrificed fairness for simplicity. It is true that the yield will not be as big as I personally feared, but one 10 per cent. rate, while eliminating anomalies, creates a much less fair system. For example, there is to be a 10 per cent. V.A.T. rate on clothing. I hope that nobody is under any illusion that that is the same as a 10 per cent. purchase tax rate because it is nothing of the sort. It is very much higher.
Under the new 10 per cent. rate, children's clothing will be taxed at the same rate as a mink coat. Therefore, though we may not have any anomalies, we shall move to a much less fair system. I believe that nobody is under any illusion that it is a simple tax; it is only that it is less complicated.
One has only to think of the problems of a farmer—who is not normally the sort of person who keeps a full double-entry set of books—having to make a repayment claim because of his zero rating. I cannot imagine the Customs and Excise being very keen to make repayments without seeing full records.

Mr. William Clark: What about S.E.T. on farmers?

Mr. Barnett: Reclaiming S.E.T. was very much easier than reclaiming V.A.T. will be. Equally, one can imagine the problems for a Chinese restaurant owner in making repayment claims and setting off rebate against tax due. Equally, one can imagine the situation with regard to the part exchange of second-hand cars. There are also many items which have not been exempted, and my hon. Friend the Member for Putney (Mr. Hugh Jenkins) referred to the theatre. No doubt there will be many other matters to which we shall be referring when we discuss the Finance Bill.
I hope that the Minister of State will give some clarification on stocks. I would accept that sale or return is a reasonable method, but the short tax holiday either will be so short as to be meaningless, or will be so large a period as to provide not a tax holiday but a tax bonanza for the sort of people who will get their shovels into that sort of period for the relief from purchase tax or any other form of taxation. This will have some serious economic consequences. If stockists are left with the impression that they will be holding large amounts of stock which have been subject to purchase tax, I hope that the Minister of State, before we reach the Finance Bill, will say how those stocks will be handled.
It will have become clear from what I have said that the Budget is to be condemned on economic grounds, if only because the major problem of unemployment will still be very much with us in 12 months' time. It is to be condemned on social grounds because of its misplaced purpose involving the payment of £1,000 million in direct tax relief and nothing for the lower paid. It is to be condemned for pursuing a deliberate tax policy against the interests of the vast majority of the people of this country.

9.30 p.m.

The Minister of State, Treasury (Mr. Terence Higgins): From time to time it is the privilege of those speaking from this Dispatch Box to congratulate hon. Members on making their maiden speeches. It is much rarer and much sadder to express appreciation to an hon. Member making his final speech. But I know that the whole House will join


the hon. Member for Heywood and Royton (Mr. Joel Barnett), as I do, in expressing regret at the impending departure of my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). We shall miss his contributions to our debates as much as we enjoyed his final contribution today. His tribute to my right hon. Friend the Chancellor of the Exchequer will be greatly valued, I know.
My right hon. Friend the Member for Kingston-upon-Thames has been a distinguished Financial Secretary, Chief Secretary, Paymaster-General, Minister of Transport, Minister of Pensions and Chairman of our Public Accounts Committee. The House and the country have benefited greatly from his counsels. [Hon. Members: "Hear, hear."] Given the broad scope of my right hon. Friend s Budget Statement, it is not surprising that the debate so far has ranged widely. Some interesting suggestions have been made, for example, by the hon. Member for Dewsbury (Mr. Ginsburg), and the hon. Member for Manchester, Ardwick (Mr. Kaufman) has asked some specific questions. I hope that I shall be excused if I do not provide the answers tonight. I shall certainly bring the hon. Gentleman's points to the attention of my right hon. Friend primarily concerned.
In the time available to me this evening I should like to do two things: first to spell out in more detail our proposals for a value-added tax, and secondly to place the Budget within the overall economic context.
As my right hon. Friend said on Tuesday, our objective has been to design not merely a value-added tax but the best possible form of value-added tax, and I think it is true to say that the reaction since the Budget suggests that we have succeeded in that objective.
There can be no doubt that the publication of the Green Paper and subsequent consultations have been a tremendous help. I should like to pay tribute to the enthusiastic work of the staff in Customs and Excise. They have received more than 700 representations about V.A.T. and have discussed it with more than 300 groups, in some cases on a number of occasions. As a result, we have been able to meet many of the points made.
It may be that it is not in the power of any Chancellor of the Exchequer or any Government to devise a popular tax, although Treasury Ministers naturally regard their offspring with more affection than the public at large. The House will recall that the Chief Secretary in the previous Government—now Lord Diamond—always maintained that S.E.T. would eventually become accepted. He was mistaken. None the less, V.A.T. should prove less unpopular than the S.E.T. and purchase tax which it replaces because of the way in which it is designed; that is, to be simple, to reduce discrimination and to be fair. There is no reason to suppose it will be regressive.
My right hon. Friend stressed in his Budget speech that there will be only one positive rate of V.A.T. In reaching this decision he was conscious of the need both in the interests of the taxpayer and of the Revenue authorities to keep the structure of the tax as simple as possible.
Before the Budget we heard some gloomy forebodings about the intolerable burdens it would place on businesses to have to analyse both their outputs and their inputs between perhaps three or four different rates of V.A.T. Those fears at least have been removed. There will indeed be new records to be kept and new or adapted accounting procedures to be introduced, and we fully realise that that will not be an entirely painless process. But the consultations that have already taken place since last March have suggested many ways in which the administrative inconveniences can be minimised, and Customs and Excise will be continuing to study those problems to keep the requirements as simple as possible.
Much has been said in the Press and elsewhere about the length of time firms will need to adapt computer programming to the requirements of V.A.T. The estimates have varied considerably, but the Confederation of British Industry recently provided us with a consensus of its members about the items of information they would need by the end of this month. I am glad to say that we have been able to provide substantially the whole of that information in the White Paper. The White Paper also points out that Customs and Excise is ready to continue its consultations with trade bodies


and to give advice and guidance on any problems. Later in the year Customs and Excise will be making comprehensive literature available explaining what has to be done.
Customs and Excise will need about 6,000 extra staff to administer V.A.T. The precise number is still difficult to give because we do not know until registration takes place exactly how many taxpayers there will be. The price in increased staff is worth paying for a system of indirect taxation that is free from the discriminations and inequities of the structure we have now.
The whole basis of value-added tax is that it is far less discriminatory than selective employment tax or purchase tax. For too long the pattern of consumers' choice and the use of economic resources has been distorted by fiscal discrimination between goods and services based implicitly and often not very consistently on the concept that the man in Whitehall knows best, and that he should say in detail which things should be regarded as luxuries and which should not.
Of course, we will no doubt receive a number of pleas for special treatment. The hon. Member for Putney (Mr. Hugh Jenkins) this afternoon advanced the case of the theatre. The hon. Member for Farnworth (Mr. Roper) suggested a number of possible changes. I will not at this moment anticipate the debates which I imagine we shall have in Committee.
If, as I believe it will, the House accepts the principle of the new tax, there is one fundamental point which acceptance implies. That was recognised by my hon. Friend the Member for Basingstoke (Mr. David Mitchell) in his speech. It is that, with the exception of the main items which my right hon. Friend the Chancellor has decided to relieve of the tax, for reasons which he has given and from which the House will not, I think, dissent, value-added tax is a comprehensive tax. This means that we cannot, having accepted the principle, reasonably at later stages begin to accept this or that Amendment to include or exclude this or that detailed item.
If we were to do so, two things would happen. First, the basic rate of tax would have to be raised above the level suggested by my right hon. Friend, and, secondly, we should soon find ourselves

in that wilderness of anomalies and lunatic line-drawing exercises which in purchase tax, largely by accident, and, as far as S.E.T. is concerned, partly by design, have bedevilled our indirect taxation system for so long.
Of course, I would not pretend that V.A.T. will be perfect and entirely free from anomalies. The only way to have avoided that would have been to have made it completely comprehensive with nothing exempt or zero rated. That is not a solution which the House would welcome. Trivialities apart, I think that we can say we will avoid the kind of irritating difficulties in indirect taxation of which my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) has complained for so long.

Mr. Hugh Jenkins: Does the hon. Gentleman agree that, some exceptions and exemptions having been conceded, this must necessarily mean that such a thing is not excluded in principle and that it is possible, if one puts forward a sufficiently persuasive argument, to persuade him that the exemption should be extended in a particular area? It is also possible that at some stage he might decide to reduce the exemption. Therefore, in principle does he agree that this is not necessarily something which is fixed and done for all time?

Mr. Higgins: I have put forward the Government's decision. We believe that we have gone as far as we can. However, it would not be right for me to anticipate debates which may take place in Committee.
Before the details were announced, a great deal of opposition to V.A.T. was expressed on the grounds—

Mr. Robert Sheldon: Mr. Robert Sheldon (Ashton-under-Lyne) rose—

Mr. Higgins: No, I will not give way.

Mr. Sheldon: It is on the same point.

Mr. Higgins: If it is on the same point, I have already answered it. I hope that the hon. Gentleman will allow me to continue.
Before the details were announced a great deal of opposition to V.A.T. was expressed on the grounds that it would have an inflationary effect and be harshly regressive.
The present Leader of the Opposition, speaking in the Budget debate last year—I stress last year—expressed these fears with his usual moderation in those words:
Everyone knows—we have seen it recently on the Continent with the enormous price increases following the introduction of the value-added tax—that to introduce it here in 1972 or any other year will mean an inordinaate rise in the cost of living for ordinary families, even with the omission of newspapers and food.
He then went on:
The Chancellor did not say whether value-added tax would apply to rail fares and fuel. If it does, it will increase the cost of living still further. If it does not, it will mean that the amount of revenue which he has to raise to replace the S.E.T. and purchase tax on the narrow coverage of value-added tax will be at totally intolerable and unacceptable rates for the average family."—[Official Report, 30th March, 1971; Vol. 814, c. 1405–6.]

Mr. Sheldon: Mr. Sheldon rose—

Mr. Higgins: I will not give way yet. I want to finish this point.
Following the list of items my right hon. Friend has said will be exempt or zero-rated and the fact that the standard rate will now be 10 per cent., the extent to which the Leader of the Opposition's fears about regressivity were unjustified will now be apparent to the House, as my hon. Friend the Member for Dartford (Mr. Trew) made clear earlier.

Mr. Sheldon: The hon. Gentleman seemed to suggest that there would be no possibility of concessions being made in Committee on the V.A.T. list of exemptions and zero ratings. Did I understand him aright?

Mr. Higgins: I made that position perfectly clear. [Hon. Members: "Answer."] I do not wish to detract from what I said. The hon. Gentleman will be able to see from the Official Report of my remarks that I answered the question. I said that we could not anticipate the Committee stage.
Continental experience on prices varies from country to country, contrary to what the Leader of the Opposition said. In Germany there was no problem of price increases. In Denmark prices went up for the simple reason that tax rates were increased. The right hon. Gentleman cannot therefore say that price increases are inevitable. As my right hon. Friend

said, the overall effect of the Government's reform of indirect taxation is estimated to reduce prices.
The hon. Member for Heywood and Royton described the tax as unfair. I am not entirely clear what he meant. However, as I say, it is not our view that the tax is regressive. I will elaborate the point by referring to the Budget representations of the Child Poverty Action Group. It asked for adjustment of the coverage of the tax to minimise regressiveness, and this is precisely what has been done. The Group asked us to zero-rate food. Apart from items subject to purchase tax, which is a qualification we have always made, this has been done. It asked that rents should be exempted and the supply of new houses zero-rated. This has been done. It called my right hon. Friend's attention to the fact that fuel was a relatively important item in the expenditure patterns of the less well-off, especially pensioners. Before its memorandum was received he had already appreciated the case for zero-rating fuel. Thus, items of expenditure which constitute a substantial proportion of the expenditure of low income families will be relieved. There are, therefore, no grounds for supposing that the change over to V.A.T. from purchase tax and S.E.T. will be regressive.
Nevertheless, the Leader of the Opposition remains committed to "total and unremitting opposition" to V.A.T. I was interested to hear my hon. Friend the Member for Dartford suggest that the right hon. Gentleman intended to send his hon. Friends into unarmed combat, but I will not comment on that.
The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) was more cautious yesterday. Only two short paragraphs of his speech referred to V.A.T. I do not believe that any of the criticisms he made are valid, but we shall be happy to pursue these in the Finance Bill debates.
Perhaps I should say a word about tax paid stocks, for having topped and tailed about 1,000 letters to hon. Members about this, I know that the House is interested in the problem. We gave a great deal of thought to all the many suggestions we received over the past year on how best to deal with this problem. I think it is generally accepted that a perfect solution is unattainable. It is not


really practicable to require every retailer or unregistered wholesaler to make an accurate assessment of the element of purchase tax in their stocks at close of business on 31st March, 1973. Some may be able to do so but many retailers would simply not know what it was, for example, because they had bought at purchase-tax-inclusive prices.
It has also been suggested to us that if traders were not able to do the calculations required, they would not be able to claim relief, but I think this could reasonably be regarded as unfair. Even if all traders were able to work out the necessary details and do a physical stock-taking, it would certainly be impossible for the Customs and Excise to check all the repayment claims and I doubt very much whether the accountancy profession, though it might be encouraged by the hon. Member for Heywood and Royton, could shoulder the burden either. We therefore discarded any relief schemes based on the levels of actual stocks on 31st March, 1973, because they could not have been controlled adequately.
We therefore came to the conclusion that what was wanted was a simple scheme which could be applied to all traders and one which involved as little additional work as possible at a time when everybody would be occupied with preparing for V.A.T. This is why we decided to adopt the administratively simple solution of a tax-free period, to allow traders an opportunity to dispose of stocks on which purchase tax had been charged and to build up a supply of purchase tax-free stocks for sale after 1st April, 1973. Under this arrangement purchase tax will be removed by order under existing legal powers a short time before V.A.T. comes in. We envisage that sales of taxed stocks in the tax-free period should continue to be at a tax-inclusive price so as to ease the transition. This of course means that the tax-free period cannot be too long lest significant quantities of goods enter consumption tax-free to the detriment of the revenue. We have to hit the right balance in these matters.

Mr. David Mitchell: Can my hon. Friend indicate whether any limitation will be placed on the drawing of stock during that period or any permitted

volume which the retailer is able to move during that period?

Mr. Higgins: We shall have to take certain powers but the basic principle is that we should hit a balance so far as the actual length of the period is concerned. The tax-free period will not, however, be suitable for all goods, particularly those with a high unit value and liable to the new top rate of purchase tax. For these categories of goods, which are listed in the White Paper—

Mr. Joel Barnett: The hon. Gentleman will accept that if it is a very short period retailers will be left with substantial stocks and, there will be unavailable duplication of both purchase tax and value-added tax on stocks. Would it not be preferable to take either the average of the last three years stocks or a stock figure based on a number of weeks turn over?

Mr. Higgins: I should stress that we have looked at all possible suggestions in tremendous depth and we believe that the solution we have selected is the right one.
As I was saying, the tax-free period will not be suitable for all goods, particularly those with a high unit value and liable to the new top rate of purchase tax. For these we think that traders should be able to use sale or return arrangements so that stocks of these, if unsold when purchase tax ends, will then be liable only to V.A.T.
There is one important advantage of V.A.T. and the 20 per cent. regulator power which has not yet been fully recognised and to which I should like to refer. The coverage of purchase tax is limited. Consequently changes in the rates of purchase tax intended to stimulate or restrict demand in the economy as a whole are concentrated upon a relatively small slice of consumer expenditure. The introduction of V.A.T. will reduce the scale of this problem. The V.A.T. base is almost double that of purchase tax and the combined yield of purchase tax and S.E.T. is being replaced by a V.A.T. rate of only 10 per cent. This is one great advantage of a broadly-based consumption tax: the tax load is spread


much more evenly and much more equitably.
Consequently, with the exception of the motor industry, those industries producing goods liable until this Budget at the purchase tax rates of 30 per cent. and 45 per cent. of wholesale value will in future be subject to much lower rates. Furthermore, the percentage change in the V.A.T. rate required for any given change inrevenue is much less than the corresponding change that would have been needed in purchase tax rates. Firms will therefore be able, under V.A.T., to make their future investment plans with far less uncertainty about the future level of tax on their output, and therefore on the level of demand, than was ever possible under purchase tax.
The motor car manufacturers will share to a considerable extent in these advantages. Since purchase tax was introduced in 1940 the rate of tax on cars has varied between 66⅔ per cent. and 25 per cent. of the wholesale value. In addition, until last year, variations in hire-purchase controls were a significant factor in determining the overall level of demand for cars. These, like the tax rates, were changed overnight. This was stop-go with a vengeance.
The Government have taken several steps to improve the situation. The overall effect of the change to value-added tax and the new car tax will be a small further fall in total tax on cars from the reduced level just announced. The value-added tax on cars will, of course, be subject to the regulator power, but it has been decided that the new car tax will not be subject to a regulator power.
No Government can, of course, bind their successors—I think this answers the point raised by the hon. Member for Heywood and Royton—but this decision may be taken as an earnest of this Government's desire to make it easier for the car industry to plan ahead than has been the case in the past. In our view, taken overall, the value-added tax will provide a means of economic management which greatly reduces the risk of dislocating the output of the industries subject to the tax. We believe that it will contribute to bringing about the sustained rate of economic growth that we all wish to see in the years ahead.
This brings me to the overall economic context within which the Budget is framed. One of the interesting features of the debate has been the absence of any widespread criticism of my right hon. Friend's Budget judgment. We have heard very few voices—except, perhaps, that of the hon. Member for Farnworth—expressing the view that the Chancellor should have aimed for growth much greater than 5 per cent. Nor has there been much criticism that he has stimulated the economy too much. This is all the more surprising since, in the period immediately before the Budget, the range of spontaneous advice extended from that of those who wanted tax cuts of £350 million to that of the National Institute, which wanted £2,500 million. This leads me to the conclusion—and the debate has reflected the fact—that my right hon. Friend has, overall, correctly judged the requirements of the situation.
Nevertheless, there have been suggestions, first, that, with the growth path we have set ourselves, we may precipitate the "stop" which has been a feature of previous attempts to get the economy moving at comparable rates, and, secondly, that, by, stimulating demand to the extent that we have, we shall add demand-pull inflation to the cost-push inflation which has bedevilled us over the last two and a half years. I want to deal with both of these suggestions.
The first is the outlook for growth. My right hon. Friend has given as his forecast an estimate that output will grow by about 5 per cent. per annum between the second half of 1971—the latest half year for which we have reliable figures—and the first half of 1973. Without making any long-range predictions of what the economy is capable of, I believe that there are a number of reasons, which my right hon. Friend set out, why the potential for growth extends beyond the immediate 12 months ahead.
Yesterday the right hon. Member for Stechford accused us on this side of the House of intellectual confusion. No doubt after his recent studies of Keynes he is now expert in the intellectual confusions of the past. I had the good fortune to be taught by the late Denis Robertson, who was, of course, Keynes's immediate and indeed, foremost critic. Perhaps I may remind the House of the


final passage in Keynes's General Theory, which I have quoted to the House in a previous Budget debate. It refers, of course, to the effect which "academic scribblers" and their ideas have on those in authority
…not immediately but after a time.
The fact is, of course, that the academic scribbers, be they Keynesians, Friedmanites or Hayekians, are now lagging somewhat behind the ball game. But this does not necessarily imply that there is intellectual confusion on this side of the House.
What is clear, as I suggested in the Budget debate of 1970, is that the old relationship between unemployment and prices has broken down. The hon. Member for Heywood and Royton will recall that occasion. The so-called "Phillips relationship" has altered. That is why it is absurd as well as completely wrong for the right hon. Member for Stechford to accuse us, as he did again yesterday by implication, of deliberately creating unemployment to try to curtail inflation.
This is not and has not been our policy, though it was apparently the policy followed by the last Government, with tax increase after tax increase. But the change in the relationship between unemployment and wages and prices has been asymmetrical. Higher unemployment is not the answer to cast inflation but there is of course still a danger that if one creates excessive demand, one can add demand inflation to cost inflation with disastrous results.
After the Budget statement, in the Press and in this House, the view was expressed by some commentators that we were taking a risk with inflation. Looking at the likely downturn in aggregate demand which my right hon. Friend analysed in his speech, I do not believe that this is so. The measures which my right hon. Friend has taken are designed to achieve sustainable economic growth and not a return to stop-go or go-stop. Moreover they are designed to help in the battle against inflation, which is of paramount importance.
But the right hon. Member for Stechford was, of course, being rather old hat in criticising our demand management. Throughout, we have recognised that in the explosive inflationary situation we inherited, demand manage-

ment was not enough and that a freeze or statutory prices and incomes policy of the kind introduced by his Government would have been worse than useless.
What we have done is to combine prudent demand management with a policy of de-escalation of wages and prices. Unemployment has risen not because we have curtailed demand but because of the difficulties of forecasting in a situation where wage claims and settlements have been at an unprecedented level. We under-estimated perhaps, the extent to which inflationary wage claims would shake out labour.
Perhaps at this point I might say that it seems to me the figures quoted by the hon. Member for Birmingham, All Saints (Mr. Brian Walden) last night about inflation were completely misleading. Anyone would think that he thought there was no time lag whatsoever between inflationary wage settlements and price increases, whereas we all know that it was the inflationary trend in wage settlements before the 1970 General Election which led to the subsequent acceleration in price increases. But our policy of encouraging de-escalation in both the public and private sectors has now succeeded in halving the rate of inflation. But we are not complacent. We intend to continue that policy, because it has worked.
In this respect, the pattern of demand is of great importance and this Budget, like my right hon. Friend's previous measures, is specifically designed to assist the process of de-escalation. What we have to do now is to close the gap between increases in productivity and increases in money incomes, both by improving productivity and by reducing inflationary wage settlements. The Budget helps in both these respects.
First, by increasing demand we shall build upon the recent increase in productivity, which has taken place at an unusual stage in the cycle. Productivity now, as expansion accelerates, is likely to go up still more, and this will help to close the gap between productivity and money income increases which is essential.
Second, the massive increase in the income tax threshold will raise take-home pay for income tax payers by £1 a week.


We have repeatedly been told it is take-home pay which is relevant as far as wage claims are concerned. Claims ought therefore to be moderated.
Third, the reduction in indirect taxation, particularly purchase tax, will directly affect prices and in time wage increases. It really is nonsense for the right hon. Member for Stechford to assert on television last night that the purchase tax cuts will not help the man in the street. How out of touch can one get? Does he really believe—

Mr. Roy Jenkins: If the hon. Gentleman is going to quote me, he should quote me accurately.

Mr. Higgins: I hope that I have not misquoted the right hon. Gentleman—

Mr. Jenkins: Yes, you have.

Mr. Higgins: If I have, I apologise. Perhaps I might make the point that I was going to make, which is still relevant. The cuts in purchase tax will have a considerable effect on the man in the street. It is not only the rich who buy television sets or washing machines, electric or paraffin space heaters, electric irons, light bulbs, radio sets, mirrors, soaps, shampoos, proprietary drugs and medicines. All were previously charged at 33 per cent. and that rate will now be reduced.
Of course, gramophones, records and cosmetics, which are not the prerogative of the rich, will also be substantially reduced. So the purchase tax cuts will, I believe, have an effect on prices. My right hon. Friend's Budget shows prudence and imagination. Combined with our policy of de-escalation it takes a major step forward in our battle against the upward spiral of inflation and in my—

It being Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.

BUSINESS OF THE HOUSE

Ordered,

That at this day's Sitting the Road Traffic Bill [Lords] may be proceeded with, though opposed, until any hour; and that the Motion relating to Education may be proceeded with, though opposed, until half-past Eleven o'clock.—[Mr. Fortescue.]

ROAD TRAFFIC BILL [Lords]

Order for Second Reading read.

10.1 p.m.

The Solicitor-General (Sir Geoffrey Howe): I beg to move, That the Bill be now read a Second time.
This Bill consolidates with amendments proposed by the Law Commission a number of enactments referring to road traffic. It is the same as the Bill introduced in the last Session in another place at the end of July but which then made no further progress. It has in the present Session been through all its stages in the other place. It represents the second stage in the consolidation process. The first stage was involved in the Road Traffic Regulation Act, 1967.
Both that Act and this Bill are based on the previous even larger consolidating Act—the Road Traffic Act, 1960. The size and comprehensiveness of the Bill are both an indication of the invaluable contribution made to statute law reform by Members of both Houses who serve on the Joint Consolidation Committee working in conjunction with the Law Commission.
The Bill, apart from the purely consolidating aspect of it, gives effect to 14 recommendations of the English and Scottish Law Commissions. They all consist of minor amendments and corrections of anomalies that have been examined and approved at two sittings of the Joint Committee on 15th December and 26th January last. The Committee itself made some improvements in the form of the Bill, expressed its satisfaction with its contents and concluded that there was no point to which the attention of Parliament should be drawn.

10.2 p.m.

Mr. Frederick Mulley: I realise that the scope of debate on a consolidation Bill is very narrow. One possibility would be to raise questions about the recommendations of the Law Commissions. I do not wish to do that but I would join the Solicitor-General in paying tribute to the members of the Joint Committee and also to the members of the Law Commissions.
The other point which I think it is in order to raise is whether, instead of proceeding with a consolidation Bill, it


would be better to leave the law as it is at present in various Statutes. I join the Solicitor-General in saying what a tremendous task has been involved. As a matter of general principle I welcome consolidation Measures, because they must surely be a great convenience for those concerned with this branch of the law. But I raise this point, and I hope I can have some assurances from the Solicitor-General as we proceed with this Bill.
I hope so because of its connection with another Bill at present before the House which also came from another place, a Bill which has had its Second Reading and has not yet gone to Committee—namely the Road Traffic (Foreign Vehicles) Bill. In that Bill it is already assumed—and I find no precedents for this—that this Bill is not only passed but was passed in the last Session. It is referred to as the Road Traffic Bill, 1971, and I can find no such Bill. However, since the Clause references are similar, it is presumably this Bill.
On the other hand, the Road Traffic (Foreign Vehicles) Bill, to which the House must give further attention, also refers to some of the Statutes which are repealed by this consolidation Bill. Therefore, it is a rather difficult question whether it would be for the greater convenience of hon. Members in considering the Road Traffic (Foreign Vehicles) Bill to wait for consolidation until after that had been passed, or whether in fact we should try to amend that Bill and take away the references which are repealed by passing this consolidation measure, because some of the Sections—and I quote in particular Section 183 of the Road Traffic Act, 1960—are in the list of measures which Schedule 9 of this Bill repeals and revokes.
The Government have put us in a difficulty by proceeding in this way with that Bill. The subject matter is non-controversial. Indeed, the Bill was welcomed by hon. Members on both sides of the Second Reading Committee. The fact that it was in a Second Reading Committee is a recognition of its non-controversial character. We do not want to hold it up. The Minister in charge of the Bill gave no inkling of the fact that the Government were proceeding in this way with a Bill that did not come until

2nd March from the other place, whereas the Second Reading of the Road Traffic (Foreign Vehicles) Bill took place on 2nd February. The Government have caused some inconvenience and confusion to hon. Members.
Although as yet no Amendments have been tabled, I have no doubt that the Government will be proposing Amendments to deal with this difficulty. If the Solicitor-General can give us some assurance on that point, I would not seek to oppose the Bill tonight. Certainly it would be a rather unusual proceeding to divide the House on a consolidation Measure. I am sure that the hon. and learned Gentleman will be good enough to look into these matters and see that we have an opportunity during the Committee Stage of the Road Traffic (Foreign Vehicles) Bill to rectify what seems to be a very unusual proceeding.

10.6 p.m.

The Solicitor-General: With permission, Mr. Deputy Speaker, I should like to reply very briefly, as far as I can, to the points raised by the right hon. Gentleman. One of the questions he posed he described as a very difficult one. I do not have an immediate and ready familiarity with the provisions of the Road Traffic (Foreign Vehicles) Bill, but I assure the right hon. Gentleman that the fact that this Bill is described as the Road Traffic Bill, 1971, presumably relates to the date on which it was introduced in the other place.

Mr. Mulley: I was complaining more about the fact that it is described in the Road Traffic (Foreign Vehicles) Bill as the Road Traffic Act—not "Bill" but "Act"—of 1971. I appreciate that it is usual in this context.

The Solicitor-General: I appreciate the right hon. Gentleman's point. As I understand it, the date changes automatically, according to the date a Bill is enacted; although it may start off with one date, it changes when it reaches the time for enactment.
I can see the possible confusing situation which arises with overlapping provisions of this kind, lapping and relapping each other. I shall certainly look at the right hon. Gentleman's points and draw them to the attention of my right hon.


Friend. I am grateful for the right hon. Gentleman's assurance that the process of consolidation does not deserve to be impeded by the overlapping nature of these provisions.
I shall certainly see that the points he raises are looked at. I cannot give any personal assurance, on my own behalf, on matters extending into a wider area of transport policy but, speaking as some-

one who is concerned with the quality of legislation, I shall certainly see that the matter is looked at.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Fortescue.]

Committee tomorrow.

SCHOOL LEAVING AGE

10.4 p.m.

Mr. Edward Short: I beg to move,
That this House takes note of the Raising of the School Leaving Age Order 1972, a draft of which was laid before this House on 1st February.
The Motion was originally put down as a Prayer. The Prayer is now out of time, and we have a different wording. The present wording suits my purpose very much better than the wording of the original Prayer, because I am not against the raising of the school leaving age. I am very much in favour of it. I congratulate the Government on their decision to carry on with this overdue reform.
My purpose tonight is to call attention to one consequence of the raising of the school leaving age which I am quite sure neither the right hon. Lady nor anybody on either side of the House intended. I realise that since I put down the Prayer—and I make no complaint about the delay—my hon. Friend the Member for Durham, North-West (Mr. Armstrong) has had an Adjournment debate on it to which the Under-secretary of State replied. As my hon. Friend dealt mainly with the problem from the point of view of his own constituents in the North-East, I make no apology for raising the matter again this evening.
In the debate on the Adjournment on 23rd February the Under-Secretary of State admitted that the need is much greater for maintenance allowances in areas like the North-East of England than it is in counties like his own. He gave the figures for Durham and Berkshire. In Durham there are 1,127 children for whom allowances are being paid, and in Berkshire 62. That is understandable.
In February this year unemployment in the North-East of England was 9·3 per cent. This was an increase of 27 per cent. over August, 1971—six months ago. That compares with an increase of 71 per cent. over the whole 10-year period, 1960 to 1969. In this 9·3 per cent. unemployment which we have in

the North-East of England at present there are 92,000 males unemployed.
This deep-seated and persistent economic malaise in areas like the North-East has repercussions on the life of the region in a great many ways, not least on education. Most of the region's educational handicaps—and it has many—stem from the fact that fewer children stay on at school over the statutory leaving age. In the North-East the latest figures I have seen are 46·9 per cent. staying on at the age of 15; in the South-East 63·8 per cent. This disparity between the numbers staying on over the statutory leaving age in areas like the North-East—I think it applies, perhaps not equally but to a considerable extent, in all other development areas—is certainly because of financial and social factors and the deep-seated insecurity of the people who live in an area of that kind.
But because fewer children stay on over the statutory leaving age, fewer children in the North-East go in for higher education. This in turn impedes economic development because the modern sophisticated industry which we hope to attract there needs the support of a vigorous local higher education system. So we are caught up in a vicious circle. Recent years, however, have seen a commendable effort to induce more young people to stay on over the statutory leaving age. I pay special tribute to the Director of Education in Durham, who has made tremendous efforts in this direction. I am quite sure that maintenance allowances have played a part in this—a small part, but nevertheless an important part.
In my own City of Newcastle the amounts being paid out at present are approximately £9,000 for allowances for the 15- to 16-year-old age group, £6,000 for the 16- to 17-year-old age group and £6,000 for the 17–18 age group—a total of £31,000 a year. These amounts are important, although not large. They are small for two reasons. The first is that not nearly sufficient people know that the allowances are available. The second reason, of course, is that the scales are quite inadequate.
In July 1971 the North-East Council of Education Committees drew up a revised scale which most of the authorities in the area have adopted. But even the revised


scale was hopelessly inadequate. All it did was to add about 15p a week to the allowance. The inadequacy of the allowance is illustrated by the fact that net parental income must not exceed £7·75 a week to qualify for the maximum allowance for a 15-year-old boy.
As the hon. Member for Durham, North-West said on 23rd February in the Adjournment debate, this really is ludicrous. What is true of the North-East is, I believe, true of all the development areas. Naturally, the numbers who do and can avail themselves of the amount are very small because of the inadequacy of the scales which are out of date. The Under-Secretary said that nationally 20,000 parents were receiving the allowances. I think this was based on the 1970 survey. But there are 556,000 children in the age group of 15 and over excluding the 15-year-olds who are under school-leaving age, roughly one in 27.
I have no idea how many of these are 15-year-olds who get allowances but probably between 6,000 and 10,000 out of 223,000 in the age group of 15 years but over the school leaving age. The approximate proportion is one in 30 of the 15-year-old age group. I very much regret that only about one in 30 of 15-to 16-year-olds get help, but I am quite sure that very many more parents of children in this age group need it and would avail themselves of it if they knew about it and if the scales were adequate. But because the numbers are so abysmally small the cost of giving the allowance to the 15- to 16-year-old age group must also be very small indeed. I estimate it would be between £30,000 and £50,000 per annum, but probably very much less.
These allowances are paid by the Secretary of State under regulations made under Section 81(c) of the 1944 Act. On 24th August last the Secretary of State sent out Circular No. 8/71, which said:
Maintenance allowances payable under the Regulations made under Section 81 of the Education Act, 1944 are available only for children above compulsory school age. From 1st September 1972 such allowances will not therefore be payable in respect of children of 15 unless they are covered by the exception in Section 114 (6) mentioned in paragraph 4(ii) above".

Section 114(6) can be omitted from our discussion because it has only a marginal bearing on the point I am making.
The Secretary of State's ruling is given, quite rightly, under the law as it is at present. It means that a relatively small group of poor parents with children of 15 who get allowances now are not going to get them after 1st September this year. I am quite sure that this is an administrative consequence of the political decision to raise the school leaving age, and I am sure that the Secretary of State did not intend that this should be. I am sure that no one in the House intended this result.
I realise that as the law now stands allowances cannot be paid in spite of what that supposedly responsible journal Education said about me on 3rd March. I realise, as I have always realised, that the law does not allow them to be paid. But all that is required is very short one-Clause Bill deleting three words from the 1944 Act and substituting three other words.
I guarantee that if the right hon. Lady wished we would pass such a Bill through all its stages in one day, as we did with the Northern Ireland Act. If that is not acceptable, I would understand it, but I would guarantee that the right hon. Lady could have the Second Reading and Third Reading on the nod and have the Committee stage in one day. So there is no parliamentary problem; the right hon. Lady cannot plead lack of parliamentary time. There cannot possibly be a public expenditure problem.
The purpose of this debate is simply to make that one point. I am not cluttering up my speech about raising the school leaving age with any other points that I would dearly love to make. The whole purpose of the exercise is to ask the Secretary of State if she will change the law in that way to enable those poor people, the poorest of the poor—they must be, or they would not qualify—to keep the allowances they now receive. It is ironical that I must make this request in this of all weeks, after a Budget in which the Chancellor handed back £300 million to those whose incomes are entirely investment incomes.
All I am asking for is probably between £30,000 and £50,000, and perhaps less than that. It is a mere crumb compared with some of the Chancellor's


handouts. If the parents concerned need the allowances this year, they will still need them after 1st September. Their sons and daughters will not stop eating after 1st September; they will not start wearing everlasting, non-wear clothing after 1st September. These young people, as the right hon. Lady knows—she has a family of her own, as I have—are physically adults. The cost of their maintenance is enormous: it is a growing financial strain for their parents which will not end and will not diminish after the school leaving age is raised to 16 on 1st September. It will almost certainly increase.
The Under-Secretary of State, to whom I am most grateful for sitting in tonight, said on 23rd February that he could hold out no prospect of legislation. I have learned from experience that he chooses his words with care, and I note that that does not turn it down entirely. He said:
This is a very personal subject on which, in general principle, it would be right for the House to continue to entrust discretion to local authorities."—[Official Report, 23rd February, 1972; Vol 831, c. 1460.]
I would settle for that. Let us allow the local authorities discretion to continue to make payments to 15-year-olds. I should like to go further, but if the Government would agree with that I would settle for it and congratulate them. I do not ask that it should be extended over the whole compulsory age range. That was a rather silly point that the hon. Gentleman made on 23rd February. We are asking for people to keep what they have now. That does not imply that we are suggesting that all schoolchildren should have allowances. All I am asking is that the parents of children of 15 who now receive an allowance, the poorest of the poor, should be allowed to keep what they have.
The right hon. Lady wrote to my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) a letter in which she said:
For the younger children, that is, those of compulsory school age, local education authorities have power to help parents under existing arrangements with such items as school meals, uniforms, transport and other expenses as may be necessary to enable pupils to take part in any school activities. I cannot agree that the social security provisions are not appropriate in cases of hardship which are not covered by these arrangements".

May I make it clear to the right hon. Lady that these arrangements are not comparable in scale and are quite inadequate. The need has existed hitherto for the 15–16 age group and it will continue to exist after 1st September. If the right hon. Lady refuses to change the law to enable parents to get these extra allowances, all I can say is that her decision, which we are awaiting tonight, will fall into the same category as her decisions on school milk and meals. I am sure that even she does not want to make another such decision.
In a week when £1,000 million-plus has been handed out, yet virtually nothing has been given to the poorest members of the community, and nothing much to children—I do not know whether the right hon. Lady has seen the article in this evening's Evening Standard headed "Women and Children Last", referring to the Budget—I want to appeal to her on behalf of these 20,000 needy parents for a crumb. That is all I ask of the right hon. Lady tonight.

10.27 p.m.

Mr. John E. B. Hill: We can all understand why the right hon. Member for Newcastle-upon-Tyne, Central (Mr. Edward Short) was not sorry that the lapse of time has caused this Motion to be expressed in a different way, because we appreciate that he would not want to oppose the raising of the school leaving age. He directed his remarks to what has always been, in my mind, the biggest justification for raising the school leaving age; namely, that we hope it will lessen the disparity between the north and the south. He has illustrated the root causes behind that disparity.
I have always hoped that one result of raising the leaving age would be that teenagers still at school would not see, as happens with those who now stay on voluntarily, their exact contemporaries in the world of work earning what seem to be comparatively large sums of money, even though they may be in dead-end jobs. That would no longer be seen to be an option and children should be more willing to stay on and enjoy the extra year. That is the consequence which I hope will follow. We all appreciate the right hon. Gentleman's sincerity in putting forward this very difficult case on behalf of those families he has referred to. It


is really by legal rather than administrative effect that the allowance becomes impossible to pay, just as in another sphere work experience schemes are stopped and 15-year-olds will no longer be able to drive farm tractors. In the long run I hope that some future legislation will restore these practices so that children do not lose such facilities and experience as a result of the leaving age being raised.
In my opinion, the right hon. Gentleman has raised a problem of poverty rather than education. Clearly, it is undesirable that the raising of the leaving age should affect these particular families. My calculations show that the figure is about 1 in 30. Although the proportion is small, I cannot help feeling that it would be more desirable not to extend the responsibilities of the educational budget. I would prefer this to be dealt with by the Department of Health and Social Security. Most of those who are concerned with education would like the Department of Education and Science to be relieved of the social obligations and responsibilities because there are so many more purely educational tasks we should like the Department to be able to undertake.

Mr. Bob Brown: Surely the hon. Gentleman must realise that the State accepts full responsibility for the maintenance of students undergoing further education. What difference is there between a 15-or 16-year old and an 18-year old in this respect?

Mr. Hill: The difference lies in whether the educational activity is a statutory requirement or a voluntary undertaking. That is a perfectly definable and acceptable borderline. I do not want families to suffer poverty as the result of the raising of the school leaving age, but I would rather see that social obligation discharged by someone other than the educational body.
It is surprising that we should be here tonight approving the order when we have all been working on the basis that the school leaving age was raised. Some people are quite surprised that only now are we formally authorising it. We are long committed to the raising of the school leaving age. It goes back to the

Spens Report of 1938. Having been embodied in the Education Act, 1944, it was recommended by the great reports of Crowther and Newsom. It is very sad that Lord Crowther did not live to see the reform which he so strongly advocated brought into effect. I acknowledge my gratitude for his great contributions to our education system.
If these two reports on secondary education had come out after the Plowden report on primary education instead of before it, we might have devoted more of our resources immediately to preschool education. Compulsory education here starts at five, which is a year earlier than in practically all other countries, and this removed some of the pressure building up for more pre-school provision. In the circumstances that exist today I am sure that we should carry through our plans for pupils of 15, because that is what we have positioned ourselves to do.
The greatest trouble has been taken in every school that I have visited or heard of to prepare for a formidable challenge. The resources have never been unlimited, and I hope the Secretary of State will be able to provide the resources still required to make a success of this scheme. About £125 million has been spent on buildings to provide extra accommodation. Nevertheless, most schools are finding it hard with their money for the raising of the leaving age immediately to provide all the facilities that are deemed to be necessary. Therefore, I express the hope that the Department will monitor progress with a view to seeing that the deficiencies are made good. We are most unlikely to get everything right from year one.
We have the teachers, and I hope they will continue to have in-service training so that they will be better enabled to provide the tuition and personal relationship that these maturing children deserve. Surely the essence of raising the school leaving age is that young people should be fitted to take their place in the outside world of work and leisure. If the extra year of the five-year course does not achieve that, it will have failed. But I do not think it will. Signs are that the preparation has gone forward successfully, and, thanks to the work of the Schools Council, there will be in many schools a whole number of new courses.
I hope that many pupils will decide to stay on and will take some form of


C.S.E. examination, whether mode three monitored by the school or otherwise, so that they complete the five-year course. I should like to see a single school leaving date. We know that in the short term this is not feasible, but it may be that the 15-year-olds will decide to stay on and complete the course.
This is a great move forward, and I am sure it is right to go ahead. Britain cannot have a smaller proportion of children staying on until 16 than many of the countries with which we have to compete. Therefore, I wish this great enterprise every success.

10.37 p.m.

Mr. Bob Brown: The descriptive title by which the right hon. Lady the Secretary of State for Education and Science has become known, and deservedly so—"Thatcher the Snatcher"—will hardly be appropriate this evening if she does not agree to the reasonable and modest plea put to her tonight by my right hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Edward Short). She will in future become known as "Maggie the Meanie", and possibly the hon. Gentleman who aids and abets her will become known as "Bill the Kill"—an educational Bonnie and Clyde.
As my right hon. Friend has said, a simple amendment to Section 81 of the 1944 Education Act is all that is needed to put matters right. My right hon. Friend has given certain assurances from the Opposition Front Bench, and, since we are often accused of having some differences between our front and back benches, I can give a wholehearted assurance on behalf of my back-bench colleagues. We as a party were anxious a month ago on Tuesday, 23rd February, to legalise the position of British troops in Northern Ireland, and rightly so. The Labour Party would be more than willing to expedite any simple legislation to put this matter right.
My right hon. Friend has been more than generous. He has referred to a sum of £50,000 as being about the maximum required in this instance if the right hon. Lady were to be generous enough to say "We will make this small amendment to the 1944 Act and will accept that the status quo will remain at 15 on present scales." I would not be quite as generous in this matter as was

my right hon. Friend. I believe that the right hon. Lady should think about revising the scales upwards. If she were revising the scales upwards 400 per cent. on the figures quoted by my right hon. Friend, it would mean only £500,000, and that amount, in terms of educational expenditure, is, in any man's language, simply nothing more nor less than peanuts. It is one-eighteenth of what was saved by the miserable, niggardly abolition of free school milk.
I speak with deep and sincere feelings as one who was born and bred on Tyneside in the City of Newcastle-upon-Tyne and whose parents could not afford to clothe and provide me with the necessary equipment when I won a scholarship to a secondary school. It was only by the generosity, devotion and sacrifice of my elder brother, who was then a Regular in the Royal Navy—driven into the Royal Navy by the harsh economic circumstances prevailing in the North-East at that time and the fact that he could not get a job—that I was able to continue my education, because my parents certainly could not afford to allow me to accept the scholarship. So I have firsthand knowledge of what is happening to many children in my part of the country today. Of course, I am talking about 1934, but here we are 38 years on, and, though things are better now than they were then, they are still bad by any standards.
My right hon. Friend has referred to the unemployment figures in the North-East. I make no apology for repeating them. This week's unemployment figures from the Department of Employment indicate that we have 89,779 people unemployed, which is 6·9 per cent. of the working population. But this does not mask the real misery—

Mr. Edward Short: This is for the Northern Region. I was talking about the North-East.

Mr. Brown: My right hon. Friend rightly reminds me that he was talking about the North-East, where the situation, unfortunately, is a damn sight worse. Over the Northern Region as a whole 9·1 per cent. of males are unemployed. I am reminded that the position in the North-East is worse, and it is far worse on Tyneside, which my right hon. Friend and I represent.
The hon. Member for Norfolk, South (Mr. John E. B. Hill) talked about children staying on at school and being envious of their pals who leave school and, albeit they get dead-end jobs, are earning money. There was a cartoon in one of the national newspapers this week, I do not propose to identify because it might be thought by some to be in bad taste, depicting two youngsters walking into school lamenting the fact that they had to stay on for an extra year. One said to the other "It's murder. I am going to miss my 12 months' supplementary benefit." This was a cartoon, but it characterises the North-East today where the youngster sees his friend not earning a living but getting unemployment or social security benefit because he cannot get a job.
My right hon. Friend has mentioned that only 20,000 parents are getting this allowance. Therefore, there is, clearly, a complete lack of knowledge about its availability. The Under-Secretary, in an Adjournment debate raised by my hon. Friend the Member for Durham, North-West (Mr. Armstrong), said that he was pleased that it would get some publicity. Unfortunately, at 20 minutes to two in the morning that kind of thing does not get much publicity from this place. I hope, therefore, that the right hon. Lady will undertake to give some publicity to the availability of this grant. It is fair to assume that, with the unemployment to which I have referred, 20,000 people should be qualifying in the North-East alone, particularly if the income scales were brought up and especially in view of the niggardly sum of £7·75 to which my right hon. Friend referred.
Fifteen-year olds are not children in the sense that they were 40 years ago. In many respects—some say in virtually all—they are adults. I have done some research into this, and I have obtained from the Library a book which contains an interesting graph of statistics about children in Glasgow. It shows that between 1906 and 1945 13-year olds increased in average height from 4 ft. 5 in. to 4 ft. 10 in. They increased in weight from 5 st. 2 lb. to 6 st. 4 lb. These were pre-Welfare State times and included 10 war years. If those statistics applied to 39 years prior to the introduction of the Welfare State—or to 39 years less

10 war years, with the deprivation of those years—imagine what the statistics must be with the benefits of the Welfare State. There must have been a much greater improvement in physique.
I give these figures simply to show that youngsters today are bigger, need more clothing, more food and, beyond that, are more mature than were their counterparts years ago. It is, therefore, that much more difficult for their parents to keep and look after them.
My right hon. Friend gave the lamentable figures—£35,000 expenditure on maintenance of the 15 to 18 age range—for the City of Newcastle. It is an outrage that these figures should exist in this day and age. I hope the Secretary of State will look sympathetically at the case my right hon. Friend adduced and agree that we should stay at least where we are in this matter for 15-year olds. I would like us to go further, but I would not like the right hon. Lady to do that at the expense of delaying urgently needed legislation.

10.49 p.m.

Mr. David Lane: I am glad that we are debating this order to night, though I was sorry that the hon. Member for Newcastle-upon-Tyne, West (Mr. Bob Brown) referred in a cheap way to two hard-working and devoted Ministers. He rather spoilt the atmosphere in which the whole issue had been discussed.
I am pleased that my right hon. Friend has been able to stick to the 1972–73 date for making this change. In paying tribute to her I also pay tribute to Lord Boyle, who had the courage to commit the party to this course in 1964, shortly before that General Election. I am sure that there will be benefits for the children, which is the main thing, and also, as the right hon. Gentleman mentioned, for those regions which at present are particularly disadvantaged in this respect.
The fact that the Government are going ahead with the change, in contrast to the last Government's postponement, will be seen in retrospect as one of the best educational advances of the Conservative Governments of this decade and the last. But this is not, as we all know, a popular move. My hon. Friend the Member for Norfolk, South (Mr. John E. B. Hill) has mentioned the strong feeling, of which we


are all conscious, among parents and educationists that it might well have been better to shift these extra resources to the starting end and not the finishing end of school-time for many of our children. But, now that this decision is taken, I hope the Government are keeping in mind the extreme pressure, growing as it is, to do more for nursery education just as soon as resources permit.
We have to make a success of this change and it will not be easy. Much has been done under both Governments to get the necessary buildings ready. We have been markedly successful, too, in attracting the necessary extra number of teachers. The teacher-pupil ratio should not suffer more than fractionally and for a very short time after the change. The main question mark is over the curriculum. What is to be done with the extra year? How can it be put to best use?
Much has been said about work experience schemes and linked courses with further education, and making this final year a really new year and different from the previous years in the extent to which children can get away from school in their whole orientation and out more into the community in one area or another. I hope that most effort will be concentrated in the area of community service in the locality, which I am sure will fire the imagination of even those children who seem academically dullest, about whom we are perhaps most worried.
The main anxiety in my mind is the one I have come across in many teachers. The National Union of Teachers nationally has been in favour of this change year after year for its own reasons, and yet I have found anxiety in my constituency among the teachers concerned at the chalk face—those at present in the still-secondary modern schools until we may reorganise. The overwhelming majority of such teachers are worried about the change and are not yet as reassured as I would like them to be. I have had long correspondence with my noble Friend Lord Belstead, who has paid great attention to our problems. I will not weary the House with the whole story, but what emerges from my talks with these teachers is the whole problem of discipline and whether a few recalcitrant children who do not want to take this extra year and are anxious to leave school at 15, let alone

16, may make life impossible for teachers and for the mass of the other children during the additional year. We must in the time left give all assurance we can to teachers and parents that a few trouble-makers are not going to be allowed to wreck the change for everyone else concerned.
I end on the question of preparation and the degree of urgency that is being shown in getting ready for the change among local education authorities all over the country. My right hon. Friend sent a comprehensive and helpful circular in the second half of last year to all local authorities asking for answers by early December on how their preparatory work was going and what problems still existed. I hope she can say something tonight about the results of that survey and the lessons she is drawing from it for the future.
In my area there have been good discussions between teachers and local authorities, bringing industrialists in as well. People in industry are offering transport to help get children out to various projects in the additional year. There is also the question of buildings outside school which can be used as headquarters and centres for these extra-curricular activities. This is all very promising, and more should be done.
But in the remaining time Ministers and their advisers should turn a search light on the areas where too little has been done and where teachers are anxious about what will happen when the change is made. Let us use these months with a real sense of urgency—among the Government, local authorities, local industries, local communities and voluntary associations and teachers themselves—to make sure that the change is as smooth and satisfactory as possible. I am confident that we shall then succeed, for the good of the children and the good of the country.

10.56 p.m.

Mr. Nigel Spearing: I shall in a moment follow the sensitive speech of the hon. Member for Cambridge (Mr. Lane), but I want first to support the speech of my right hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Edward Short). I spent 12 years at the chalk face myself, and when I first stood in this place I was still partly in that position.
I was responsible for many children whose parents received the allowances of which my right hon. Friend spoke. This modest allowance had considerable effects, particularly on families with only one parent and particularly when that parent was the mother. Other benefits can come, but there was undoubted psychological help to the parent.
It was done, in my authority at least, in the best way, which I am sure would have commended itself to the Secretary of State in her attempts to deal with the milk problem. Application was made to the divisional office on a separate form, and one did not know whether the application was entirely successful. But one could sense, as I have said, from the reactions and morale of both parents and children when some little help was given. It is not so much the amounts that we are concerned with. Little though they were, they were very significant in the families concerned.
This was particularly important when a balance had to be struck between whether a pupil had to leave or not. This little assistance from the community, based on educational need, helped that balance. I know that that will still be available from the age of 16 onwards, but the fact that it will not beavailable from September onwards for those 15-year-olds who by law will be told to remain at school whether they like it or not, and whose parents will be required by law to keep them at school, whether they like it or not, will be of considerable psychological importance.
Also, a number of pupils, when not at school, have been known to be not at home but engaged in activities for which they received an income. This may spread next year, if this sort of allowance is not maintained. Just before this debate, a Bill went through the House very quickly. That was a consolidation Measure, but I am sure that other Bills could go through just as quickly. As my right hon. Friend said, we on this side would give every help if the right hon. Lady chose—I hope that she will—to introduce a short Bill of this nature. In this of all weeks, when some people will have £1 per week more in their pockets, this move will not be a great comfort for many of the families about whom I am concerned. Of course there will be an extra allowance on the tax

form against children who are at school or dependent, but many of these people will not be paying tax anyway and, therefore, will not necessarily stand to gain from that.
I understand that the order has been passed and that this is perhaps a discussion noting it. The order is, therefore, of significance because we now have secondary education for all in a way we never could before. While supporting this in principle, I have somewhat mixed feelings about it, as has the hon. Member for Cambridge.
We have put rather too great a faith in time at school and believe that education then automatically occurs. I do not think that time at school is necessarily time when education is taking place, any more than the time the House sits is necessarily time when debate takes place. The truth is perhaps more intangible, that neither necessarily occurs when people are in a particular place and noise comes from them.
I was rather concerned at the division shown by the hon. Member for Cambridge when he mentioned the outward looking syllabus. I agree, but we have to be careful not to perpetuate a split between those who are capable of taking public examinations and those who are not.
The hon. Member for Norfolk, South (Mr. John E. B. Hill) mentioned the C.S.E., which is a fair examination of a liberal type, but inhibits the ability of teachers to provide some children with what they need at the time they need it. It is a fundamental principle of education that one provides pupils with what they need at the time, so that they may progress. I am not necessarily going with the theorists and pundits. All classroom teachers know what they can do with some theories.
We are now in great danger of having school leavers leaving school partially crippled in the learning sense; indeed, partially sighted. Unless the pupils who leave can go on learning, under their own volition and with the tools they have acquired, we have failed, and I fear that we now have a crisis of that kind.
This is a learning crisis as distinct from a teaching crisis. There is, indeed, a state of turmoil, if not of crisis. Some of this has been spurred on by hon.


Members opposite, as we have something of an indulgent society where we are told "Play now, pay later" and easy ways of getting cash are paraded before young people. It is difficult to persuade them that privileges and responsibilities come together and that the ways of getting money are not always easy. If we do not, there are dangers at every turn.
Finally, there is the question of tools. We have a misunderstanding of the space needs of secondary education today, and I have been writing to the right hon. Lady on this. There are school standards of buildings inherited from the past which are not suited to the growing personalities of young people today.
Some of the difficulties we have in schools today are connected with emotionally warped pupils. Difficulties in meeting their needs are partially related to providing enough space. If we can get that right—and personal relationships, rightly emphasised by the hon. Member for Norfolk, South—we can be on our way.
We can get all these things in context. I hope we may give a lot more thought to getting secondary education for all, which was the cry of educationally progressive people a century ago.

Mr. David Knox: I am pleased to be able to speak in this important, if short, debate. I am sorry that more hon. Members are not present. It is worth making the point that there are twice as many on this side of the House as on the other. The reason may be connected with the fact that hon. Members on the other side have something to be ashamed of in their own attitude to this matter when in Government.
I welcome very strongly the proposal to raise the school leaving age. I endorse absolutely the remarks of my hon. Friend the Member for Cambridge (Mr. Lane) in his congratulations to my right hon. Friend the Secretary of State.
The Measure is long overdue. People have been talking about it since the Spens Report in 1938. I was about five years old then. I am now very much older than that. We have had the Education Act, 1944, the decision in 1964, and the postponement in 1968; now, at long last, the goal is in sight. Therefore, it is scarcely a hurried Measure. The Government have not shown undue haste in

introducing it. Almost 30 years have passed since the Education Act, 1944. When the Measure becomes effective, about 10 years will have passed since the previous Conservative Government took the decision to raise the school leaving age. Therefore, those in education who try to pretend that there has been insufficient time to prepare for this do not have much of a case.
I agree with the right hon. Member for Newcastle-upon-Tyne, Central (Mr. Edward Short) and with my hon. Friend the Member for Norfolk, South (Mr. John E. B. Hill) that it is not enough to leave this matter to people staying on voluntarily. In an ideal world this would be the best thing, but, alas, there are substantial variations between one-part of the country and another in the length of time people stay on at school. Therefore, it is necessary to introduce compulsion. The reasons for the variations are as suggested by the right hon. Member for Newcastle-upon-Tyne, Central. They are social and economic reasons.
Recalling my school days, because it was not socially fashionable for people to stay on at school in the area in which I was educated, quite a number of my contemporaries left school at a point when more education could have been a great advantage to them. Hon. Members opposite are no doubt surprised to learn that I attended a State school. Quite a number of hon. Members on this side did.
The Measure is important and necessary for two reasons. In the world in the future, we need to prepare people for work more than we have done in the past. We have also to prepare them to enjoy their leisure. The hon. Member for Acton (Mr. Spearing) made the very legitimate point that extra time at school in itself will not ensure that the objectives are achieved; but, equally, without the extra time the objectives will not be achieved.
More education is necessary if we are to prepare people for the sort of work they will have to do in the future. Work is becoming more complicated and difficult at every level, from the managing director to the person on the shop floor. Work is calling for greater skill as each year passes. In addition, the pace of modern science and technology is such


that in future people will have to change their jobs once or twice in their lifetime. Consequently, people will need not merely a deeper but also a wider knowledge. They will need to acquire a broad knowledge early in life which will make it easier for them to adapt to new skills later in life.
More education is also important in relation to leisure. We are moving into a society in which people will work shorter and shorter hours. They will live longer and be able to enjoy longer retirements. Therefore, it is necessary to prepare people to make the greatest possible use of their leisure time, not by forcing them to do particular things but by arousing their interest in the numberless different pursuits, not necessarily intellectual pursuits, but those which will enable them to enrich their lives. It is rather pathetic to see that so many of our fellow citizens who have reached retirement, instead of looking forward to it as a tremendous opportunity to engage in new pursuits for which they have not previously had time, tick away their lives until they die. Education has a particularly important rôle to play in helping people to get more out of life. Education can broaden people's outlook and open the way to 1,001 different leisure-time activities, which will enable them to lead fuller and more rewarding lives.
So it is for these reasons that I welcome this increase in the school leaving age. I am delighted that it is being done. I hope that in the very near future it will be possible to go even further and raise the school leaving age to 18 because, though education is an important means to an end, it is also an end in itself.

11.10 p.m.

The Secretary of State for Education and Science (Mrs. Margaret Thatcher): The raising of the school leaving age has been welcomed on both sides of the House and I am glad that I have had the honour to put the proposal into effect. The order has now been approved and this is merely a take-note Motion. I am grateful to the right hon. Member for Newcastle-upon-Tyne, Central (Mr. Edward Short) for that. He raised one specific point while other hon. Members have taken the debate wider and have asked a number of questions.
My hon. Friend the Member for Cambridge (Mr. Lane) referred to the circular that the Department sent out to local education authorities asking them how their preparations for raising the school leaving age were going and asking them to report to the Department. Before I deal with specific points raised in the debate I would like to respond to my hon Friend's invitation to give an idea of what the replies were to that circular. They have provided a wealth of material about the steps that have been taken and are still being taken in preparation for the reform. Apart from the essential business of providing buildings, to which the hon. Member for Acton (Mr. Spearing) is constantly referring, and teachers, these include the preparation of suitable curricula, careers guidance and collaboration with further education.
Shortly after Easter I will give a full account of the information received in the series of "Reports on Education". But on the whole the resources which have been provided are being applied effectively and sensibly. There will be occasional local problems—it would be surprising in an operation of this size if there were not. But the general picture is favourable.
I will deal with just a few of the separate aspects and I start with buildings. Authorities were given power to use their allocations for the raising of the school leaving age as they thought fit. Almost 60 of them have chosen to provide special units based on the Department's building bulletin. Others have felt that the needs of the new fifth form pupils could best be met by incorporating suitable provision in secondary major building projects. In general, authorities have been planning all such projects in recent years with the raising of the school leaving age in mind. A few are planning some of their buildings in conjunction with Youth Service projects. My Department is keeping in close touch with any authorities—there are not many—which appear to have a practical problem of timing.
May I refer to teachers and the task they will have. Authorities are generally confident, and I know the right hon. Gentleman is interested in this, that their existing pupil-teacher ratio can be maintained and many plans to continue the


improvement in ratio which has been taking place in secondary schools during the last few years. More than 20 authorities refer to their intention to appoint teachers to posts of special responsibility for the raising of the school leaving age. A few have emphasised the need to recruit experienced teachers for work with the new fifth formers. Some have also appointed education officers or advisers with specific responsibility for co-ordinating preparations and others mention that close consideration is being given to the implications of the raising of the school leaving age for their school welfare services.
There is one especially interesting aspect: reports from most authorities did not refer to anticipated behavioural problems as being a major issue. One authority even went so far as to say that there was a need to offset the harmful effects of national publicity on the subject. I agree with my hon. Friends the Members for Cambridge and Norfolk, South (Mr. John E. B. Hill) that there will be problems. We all know that there will be problems of truancy and discipline. They are not sufficient to prevent us from implementing this major reform.
My hon. Friends also referred to the curriculum. Schools Council working papers and projects have formed the basis of about 80 authorities' preparations in this field. There are now 480 teachers' centres throughout the country and many have full-time wardens. Most authorities report that their teachers' centres are the focus for training and discussion. Many new courses, some involving examinations and some not, have emerged and some authorities are preparing programmes involving short residential courses. Many reports emphasise the increasing importance of careers advice, and almost 100 authorities have referred to close co-operation with careers guidance officers.
About 90 reports refer to the use of my Department's publicity material. More than 100 authorities are already concentrating on publicity through the schools either as a supplement to centrally-provided material or instead of it. Very few authorities omitted to mention this important aspect of preparations, but we are asking those which did to let us know what they have in mind. Letting the parents know about this move and

what it will mean for their children is extremely important. All told, there are grounds for confidence that the reform will be constructively and effectively implemented.
Now I should like to turn to some of the specific points, apart from those in the circular, which the right hon. Gentleman and others have raised. The first major point, which was the subject of the right hon. Gentleman's speech, was the educational maintenance allowances. The right hon. Gentleman argued that they should be available to children under the statutory school leaving age. He said that those who received it now should continue to have the maintenance allowance when they were over the new school leaving age. May I make one thing clear. If a child is now the subject of an educational maintenance allowance, that allowance will continue to be received after the order; it will not be taken away. The reason is that once a child has passed the compulsory school leaving age he cannot go back to it by virtue of an intervening order. So those who at present attract educational maintenance allowances will continue to receive them.
But that, I believe, was not the right hon. Gentleman's real point, which was that the allowances should be payable to children below the statutory school leaving age. At any rate, that was what the hon. Member for Newcastle-upon-Tyne, West (Mr. Bob Brown) wanted. I have one figure relating to Newcastle that might be of interest. The right hon. Gentleman gave some figures. I do not have his with me, but according to the information received in January, 1970, and published on 15th February, 1972, only 310 pupils were attracting the allowances in Newcastle-upon-Tyne. The hon. Gentleman might have some later figures.

Mr. Short: The North-East Council of Education Committees revised the scales in July, 1971, and recommended them to the local authorities in the area. I think most of them adopted the revision—certainly Newcastle did. I do not have any figures for the numbers of children receiving the allowances, but the totals being paid out that I gave were. I think, correct.

Mrs. Thatcher: I should like to make it quite clear that the scales are a matter


for the several local education authorities. There are no nationally laid down scales.
I should like to continue on the right hon. Gentleman's point that educational maintenance allowances should be available to children under the statutory school-leaving age. This was not a point put forward by the right hon. Gentleman's Government when the school leaving age was last raised and children of 14 ceased to be eligible for maintenance allowances. The circular sent out then, Circular 189, issued by the then Labour Government, reminded local education authorities that
Such allowances are not intended either for the general relief of poverty in the home or to take the place of earnings which the child might otherwise contribute to the upkeep of the household.
These allowances, which date from 1945, are payable by the local education authorities at their discretion to the parents of children who stay on at school beyond compulsory school age.
Before 1945 local education authorities had powers to make various allowances in respect of children at school. The 1944 Act drew a distinction between some needs, for example travel expenses, meals and clothing, for which separate provision was made in respect of children of any age in school, and on the other hand the limited maintenance allowances which were to be made available henceforth for children over compulsory school age. It was made clear at the time that the purposes of these allowances was a very restricted one. Successive Governments have regarded them as additional encouragement to parents, who by law can remove their children from school, to allow their children to remain at school. They were not intended to compensate parents for lack of earnings which their children might otherwise be bringing home.

Mr. Short: What were they for?

Mrs. Thatcher: I quoted from the Labour Government circular on that point.

Mr. Short: The right hon. Lady quoted from a circular issued 27 years ago. She is surely not holding me responsible for that.

Mrs. Thatcher: No, but I am saying that it was not put forward last time

the leaving age was raised and exactly the same arguments would have weighed then as the right hon. Gentleman advanced tonight. The maintenance allowances have always, from the time of their inception, been intended solely to prevent parents in the lower income ranges from becoming involved in expenses which they could not reasonably be expected to meet and which might force them to withdraw their children from school at an age earlier than they would otherwise have done.

Mr. Short: I have the Act here. Where does it say that? Show me.

Mrs. Thatcher: The right hon. Gentleman knows that the Act specifically refers to pupils over compulsory leaving age. The circular was sent out at the time of the Act based upon that construction, and the intention and purpose of the Act was quite clear, and the right hon. Gentleman knows that. Specific provision was also made in the Act for the other allowances to be payable at any age, and I have referred to those.

Mr. Bob Brown: I concede that this was missed the last time the leaving age was raised, but the right hon. Lady must concede that the 15–16 age group is different from the 14–15 age group. Would she further concede that those who are caught by accident of birth will have to stay on until they are 17 not 16?

Mrs. Thatcher: The arguments that the right hon. Gentleman advances could have applied last time, and the arguments which he and the hon. Gentleman have advanced would apply to children of almost any age at school and are not limited to one year below the leaving age. The arguments the hon. Member was advancing were rather different from those put forward by the right hon. Gentleman. If I were to concede the arguments of the right hon. Gentleman and his hon. Friend, educational maintenance allowances would become a general contribution to family resources, and that would be a long way from their original purpose. Since the time of the original Act there have been social security measures under successive Governments, including the F.I.S., which provides a new injection of State assistance for the first time to families earning comparatively low wages. This is a totally new social benefit and an extremely valuable


one. It was this kind of benefit which was meant to help with the general expenses of the family.
Like other benefits, educational maintenance allowances will have to be looked at in the light of the tax credit scheme proposed for further consideration by the Chancellor on Tuesday. This could be a radical change. All payments of this kind must be looked at in conjunction with that proposal. Family income supplement was introduced last year at a cost, then of about £8 million. Already provision has considerably increased in terms of social security benefits. That is the point that my hon. Friend the Member for Norfolk, South was getting at—that there are other ways of helping families with very large expenses.
Maintenance allowances are at the discretion of local education authorities both in the scale at which they operate and in the amounts they give to those who apply. There are approximately 20,000 people receiving them, as the right hon. Gentleman said. I have not the figure as a percentage of the 15–16 age group, but it works out at 2·6 per cent. of all children at school who are over the compulsory school leaving age.
So I think that the right hon. Gentleman would not merely be amending the Act by three words; he would be altering the entire purpose of these allowances in a way that was never intended. They have always been intended to help or encourage parents to leave their children at school beyond the compulsory school leaving age. [Interruption.] The right hon. Gentleman is fond of the sound of his own voice, but he expects other people to listen to him, and they usually do. I wish that he would extend the same courtesy to others.
A number of hon. Members have mentioned other points. In particular my hon. Friends have mentioned the rôle of further education, which is an extremely important one. Colleges of further education have a positive contribution to make through the development of linked courses in which pupils still at school attend a college for part of their education. I have been encouraged by the reports that I have received from local education authorities. They show that 102 areas are already operating such courses and a further 22 are planning

similar developments. The range of topics is very wide and often makes use of local opportunities. I believe that this kind of development goes a long way towards achieving the essential objectives of those who advocate a change in the law so that some pupils in their last year of compulsory education could attend colleges of further education rather than schools.
I recognise the point that my hon. Friend the Member for Leek (Mr. Knox) made that the further education service has expanded more rapidly than any other part of the education service, and the development of linked courses has introduced many of these young people to further education courses and could possibly stimulate them to continue with their education beyond compulsory school leaving age, either on educational courses or the specifically vocational courses which are provided in these colleges.
The order has gone through, and I think that we would all join in hoping that this much-needed reform will now go through as smoothly as possible and ultimately prove of great benefit, especially to those children who would not otherwise have a chance to stay on at school.

Mr. Short: With the leave of the House, I should like to say one more word. I regard the right hon. Lady's reply to my point as thoroughly unsatisfactory. It is quite disgraceful that in the week in which the Chancellor has given away £300 million to people with unearned incomes the right hon. Lady should refuse to give £30,000 or £40,000 to enable the poorest of the poor to retain maintenance allowances which they have at present.
This is typical of the right hon. Lady. It is in line with her decision on school milk and school meals. It is a thoroughly disreputable and disgraceful decision.

Question put and agreed to.

Resolved,

That this House takes note of the Raising of the School-Leaving Age Order 1972, a draft of which was laid before this House on 1st February.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Weatherill.]

HEATHROW AIRPORT (SECURITY)

11.30 p.m.

Mr. Airey Neave: The case which I wish to raise concerns the security of Heathrow Airport. For many years in the House I have raised matter son the Adjournment, and this is one of the most potentially serious matters of which I have ever spoken. I will sit down after 12 minutes to give my hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim), who has taken a particular interest in this incident, an opportunity to address the House.
The security of airports greatly concerns us all. We all know of the outrages that have occurred involving the use of explosives and the hijacking in various parts of the world from which international incidents have resulted. The security of the airport is a matter of most serious concern to the Government, the public, passengers in aircraft and, above all, pilots and cabin staff. For this reason one must consider any incident of the kind I shall describe as being of the utmost seriousness.
Measures can be taken on aircraft to prevent hijacking, but within the airport itself measures can be taken by a well-trained staff to stop hijackers and saboteurs getting on to aircraft. I say "well-trained" staff because there are regulations at London Airport which, if put into operation and properly carried out, would prevent incidents of the type I shall describe. When the staff fail to adopt these measures and permit incidents to arise the House must view the matter seriously. If the staff break their own regulations, as happened in this case, there will one day be a catastrophe at London Airport, and this would be a matter for the House to discuss. I am therefore glad to raise it in the hope that this will be a warning to all concerned that it should never occur again. It is no good pretending that sabotage and hijacking could not happen at London Airport. My story shows that they could.
A constituent of mine, Mr. Richard Bryant of Cumnor, was asked to accompany a friend to Heathrow on 8th February. The arrangement was that he should drive back his friend's car which was to have some work done on it while

the friend was in New York. Mr. Bryant did not drive the car to London Airport, and I want to correct the misunderstanding about that which was reported in the Press. He drove the car only after the aircraft had taken his friend away.
The check-in time for flight BA.501 on a B.O.A.C. jumbo jet to New York was 10 o'clock on the morning of 8th February. Unfortunately some documents were left behind, which meant that the car with both men in it had to return to London. B.O.A.C. was warned of their late arrival. The car returned to Heathrow and reached terminal 3 at 10.47 that morning.
There was in the car some property belonging to Mr. Bryant's friend, whose name I do not mention, not because it is not known to the Department and to the British Airports Authority but because he is still abroad and he has not had an opportunity to be interviewed, and his side of the story is not yet known. He had booked two first-class seats, one on which to place his property and keep it beside him. On arrival he was told, as was Mr. Bryant, that the passenger list for the flight was closed and he could not travel on that flight but could travel on another flight on a VC10 at 1300 hours that day. The car was all this time parked outside the entrance to terminal 3.
Mr. Bryant's friend took the view— perhaps unorthodox but some would think a not unnatural view—that B.O.A.C. was under contract to fly him to New York since he had booked two first-class seats for that purpose. He told Mr. Bryant to jump into the car and drove the wrong way up a one-way street towards gate 5 on the airfield near terminal 3. This was not a premeditated action. It was impulsive perhaps, and possibly somewhat unorthodox. He wanted to catch the aircraft if he could. He was probably as surprised as Mr. Bryant that when they reached the barrier manned by a policeman at gate 5, the barrier being in the down position, after some conversation they were allowed through on to the tarmac of the airport.
The car was a Peugeot with left-hand drive and Mr. Bryant, in speaking to the police or security officer, held out his passport and airline ticket and said he was trying to catch the aircraft and asked the officer to let him through. The police


officer let him through without further argument. Neither of these men knew where the aircraft was on the airfield. They went up to one jumbo jet and found that it was not the right one. Then an official on the tarmac, I believe a man with a broom, directed them towards the correct aircraft for New York.
It sounds an amazing situation, but they eventually came to the right aircraft. There they spoke to a red-capped official who was in charge of the loading of aircraft. He was told by both men that the man travelling to New York had two ticket reservations but that owing to the fact that there were a number of people at terminal 3 the staff would not process him through and asked whether the official could help. The official spoke on a walkie-talkie and asked whether a passenger who was travelling to New York could obtain a boarding pass. Meanwhile the luggage was loaded on to the aircraft.
Eventually Mr. Bryant, who had no boarding pass, and his friend both mounted the steel staircase on to the jumbo jet. The passenger was shown into his seat and Mr. Bryant left after saying goodbye—having got on board the jumbo without any boarding pass. He did not know how to return the car back across the tarmac to terminal 3 but an obliging official came up to him, got into the car with him and then drove to a different gate—not gate 5—which was opened without challenge. There was no argument from the police officer. That was the second gate through which they had gone in the space of half an hour without any challenge at all.
Mr. Bryant is a very responsible businessman. He regarded the situation as so extraordinary that when the car was parked in the aerodrome, he took out a camera and photographed it standing parked underneath the wing of the jumbo, a position in which it might have stood if a saboteur were intending to leave it there containing a bomb. He was so amazed by the situation of no interest being taken in the movements of the car that he recorded the incident by taking six or seven photographs which are in the possession of my right hon. Friend the Minister for Trade. It is clear evidence of what happened on that day and shows that there was the gravest possible breach of security.
Mr. Bryant reported the matter to B.O.A.C. It is not clear whether the airline took any action. It was understood that a reservation on the VC10 would not be required, and the corporation was amazed to hear that his friend had got on a B.O.A.C. jumbo jet which was departing earlier. No one seems to have been clear what was going on. Mr. Bryant went a great deal further. This was not in any sense a publicity stunt on his part. He realised the security aspect and telephoned the Chairman of the British Airports Authority, but he did not get very much change out of that. He spoke to a secretary who told him that the chairman was not available, but he was very persistent.
Mr. Bryant rang again the following morning and gave a telephone number in my constituency. Unfortunately the Cumnor exchange was misheard for Cunningham. In consequence, it is said that it was imposible to get in touch with him. He did not know there had been this misunderstanding. He was expecting to hear from the office of the Chairman of the British Airports Authority, but nothing ensued. Therefore, after a period had elapsed he informed my hon. Friend the Member for Gloucester, who reported the matter to me. I then referred it to my right hon. Friend the Minister for Trade, who interviewed Mr. Bryant. I think that my right hon. Friend was absolutely aghast when he heard this story and ordered an immediate investigation.
I think that the House and the public will want assurances that this kind of thing will be stopped. That is why I am raising this matter tonight.
I was not very impressed with the letter which the Chairman of the British Airports Authority wrote on this occasion. I should have welcomed much stronger language being used about the gross breach of the rules at his own airports. He merely said:
Anything which keeps us on the alert is most salutary.
I think he might have gone further. After all, the car, which was parked under the wing of the aircraft, as the photograph shows, might have contained a hijacker or a bomb. The matter should have been treated with far greater seriousness.
My hon. Friend the Under-Secretary, in allowing my hon. Friend the Member for Gloucester to say what she feels about the matter, will be aware that if precautions against hijacking and sabotage at airports are not taken, pilots and cabin staff are entitled to protest, because they bear a grave responsibility. I hope that they will be satisfied with what my hon. Friend has to say tonight. I know that for security reasons he cannot give all the details of what is being done, but I hope he will assure us that if a passenger is allowed by an airline to make a late boarding he must be escorted, if in a car, by a police officer and an airline official on all occasions. The danger is that when the talk over this incident at Heathrow has subsided, things might become lax again.
I hope my hon. Friend will assure us that top security officials will organise regular inspections on these occasions and that there will be a continuing watch. Otherwise the next car to park beside a jumbo jet might contain a bomb or harbour a hijacker.

11.42 p.m.

Mrs. Sally Oppenheim: I am grateful to my hon. Friend the Member for Abingdon (Mr. Neave) for allowing me a few moments of his time. The whole House will be grateful to him for urgently raising this highly disturbing matter.
When the circumstances were first brought to my attention by my hon. Friend's constituent I was frankly appalled at what appeared to be a very serious breach of security at London Airport. I hope that my hon. Friend the Under-Secretary of State is in a position, following his investigation into the matter, to confirm that the situation was as has been described so eloquently by my hon. Friend and that there are no qualifying circumstances whatsoever that can be accepted as an excuse for such a horrifying lack of security.
I should like to impress upon my hon. Friend that Mr. Bryant has reconfirmed to me that at no time did he produce a pass or a pseudo pass that could have been mistaken for a real one. I hope, therefore, that my hon. Friend can give a positive assurance that adequate steps will be taken by the British Airports

Authority to ensure that such a thing can never happen again.
This has been a matter of very grave concern and I know that my hon. Friend will appreciate all the implications involved, not only with regard to the safety of the passengers, the pilots and the cabin crews who use London Airport—such poor security is not fair to them—but with regard to its prestige as an international airport.
I understand, too, that the Transport and General Workers' Union has recently published a survey showing that 60 per cent. of aircraft cabin crews consider that security is inadequate and should be improved. In other words, things have become sloppy all round.
I hope that my hon. Friend, the Department and the B.A.A. will treat this matter with the seriousness it deserves. My hon. Friend the Member for Abingdon and Mr. Bryant have rendered a valuable service in bringing this matter to the public attention before and not after a tragedy has occurred.

11.45 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): The House and the public will be grateful to my hon. Friend the Member for Abingdon (Mr. Neave) and my hon. Friend the Member for Gloucester (Mrs. Sally Oppenheim) for bringing this important matter to our attention.
The account which my hon. Friend has given the House of this incident at Heathrow Airport on 8th February, when two men, one a passenger, were able to drive through a British Airports Authority control post on to the apron and up to a B.O.A.C. Boeing 747 which was about to depart for New York represents a clear and serious breach of security at the airport.
Responsibility for the provision of security measures at British airports to combat possible acts of violence, including hijacking and sabotage, is primarily a matter for the airport authorities and the airlines concerned. The Government are, however, in close and continuing contact with the airlines and airport authorities and are particularly concerned that effective security measures relevant to the threat to our aviation should be taken at our airports and by our airlines.
We therefore take a very grave view of the lapse in security described by my hon. Friend. I assure him and the House that this concern is shared to the full by B.A.A. and B.O.A.C. They offer no excuses and both have made the fullest inquiries into the incident, which should not have occurred if existing instructions had been followed. Both B.A.A. and B.O.A.C. have taken, or are taking, action intended to ensure that there shall be no repetition of this incident.
My right hon. Friend the Minister for Trade, who is at present on an official visit to Hungary, received a detailed account of this incident for the first time on 13th March. On the same day B.A.A. and B.O.A.C. were asked for urgent reports and these were received on 15th March. On the next day my right hon. Friend had a meeting with my hon. Friend the Member for Abingdon and one of the men involved in the incident.
Following those reports the Minister wrote, at the beginning of this week, to the Chairmen of B.A.A. and B.O.A.C. to emphasise to both of them the serious view which we take of this matter, to draw to their attention those issues arising from the incident which give us most cause for concern and to ask both of them to keep the Government informed of the steps which are being taken to avoid a repetition of this incident. I have explained this sequence of events at the outset as I hope it serves to demonstrate the urgency and importance which we attach to this matter.
The various reports which have been made indicate a broad measure of agreement about the basic facts, which have been described to us this evening, although they differ in points of detail. For example, both the B.A.A. control post operator and the B.O.A.C. traffic dispatcher at the aircraft have said that they were shown a pass; B.O.A.C. maintains that at no time were the two men left alone at the aircraft side; and the airline has also said that only the passenger was allowed on to the aircraft.
There is, however, no doubt, and nobody denies, that there was a lapse of security. The two men had no authority to proceed on to the apron and even if, as has been suggested, they adopted an overbearing manner, they should not have been allowed through the control post, which along with other similar posts

is intended to prevent unauthorised access to the airside.
The late arrival and the manner in which the two men reached the aircraft should of themselves have been grounds for suspicion. Although the traffic dispatcher checked on the position, it is arguable in the circumstances that there should have been a more rigorous check on the two men and the baggage. It must be a matter for some concern that this occurrence was not reported to a higher level within B.A.A. and B.O.A.C. so that an immediate inquiry could have been instituted.
My hon. Friend has referred to the fact that the man, Mr. Bryant, who was not the passenger attempted on two occasions without success to speak to the Chairman of the B.A.A. about this matter and even after he left his telephone number the B.A.A. failed to contact him. I have noted, as I am sure will the Chairman of the B.A.A., my hon. Friend's comments on the letter which the Chairman has sent to his constituent. I recognise, as the B.A.A. has acknowledged, that these telephone calls to the Chairman's office should have been dealt with far more effectively.
However, this particular criticism, however much it may be valid, is not strictly a matter for the Government, although I would not myself agree that the tone of the letter was such as to suggest that the B.A.A. was taking other than a most serious and responsible view of the incident. Indeed, the promptitude with which it dealt with the matter after it received a copy of the report which my hon. Friend sent to the Minister and the action which it has taken since, and which I shall go on to mention in a moment, would seem to belie such an impression.
The important thing now, on which I believe all would agree, is to learn the lessons of this incident and to ensure that it does not happen again. I shall therefore say something about the response of the B.A.A. and B.O.A.C. to the incident and I think also it might be helpful if I were to comment on our general approach to aviation security in the United Kingdom.
After it received the report on this matter, the B.A.A. issued an immediate directive to the general managers of each


of its five airports emphasising that existing instructions about the admittance of persons and vehicles to airside areas must be rigidly enforced and that security guards may not use discretion in permitting unauthorised vehicles into the air-side areas. Appropriate action has been taken with regard to the staff involved. B.O.A.C. has considered the implications of this incident and has decided that its existing security instructions, which like those of the B.A.A. should have been adequate to deal with the situation, require reinforcing rather than amending. The necessary action has now been taken to advise its staff.
As my right hon. Friend the Minister for Trade informed the House on 13th March in the debate on civil aviation policy guidance, our airlines and airport authorities are kept closely advised of the threat of acts of violence to their operations and of the steps which might be taken to combat these threats. There is close and continuing contact between the Government and the industry through the National Aviation Security Committee, which was set up a year ago to advise both the Government and the industry on aviation security. The committee, operating at the national level, comprises senior representatives of the Government, airlines, airport authorities and trade unions. There are also airport security committees at all the major airports in the United Kingdom. We believe that this close contact at all levels between the Government and the industry and the two-way exchange of information, both in the United Kingdom and with other States, is a major factor in meeting the threat of hijacking and other acts of violence.
However, we have to recognise that there can never be a guarantee of total security. Many steps can be taken and are being taken to contain the threat. For obvious reasons I do not want to say too much about these, but they can vary from service to service and, indeed, from flight to flight, depending on the threat. They include the searching of passengers and baggage, the guarding of aircraft and, notwithstanding the incident which has given rise to this debate, a close check on the

movement of people and vehicles between the landside and airside and within the security areas at airports.
No one can give a total assurance but I hope, within the obvious constraints, that what I have said will indicate the serious view which we take of aviation security in the United Kingdom and of the steps we have taken, practical, organisational and legal, to prepare ourselves to deal with the international problem of violence against civil aviation. We have ratified the Convention for the Suppression of the Unlawful Seizure of Aircraft—the hijacking convention—and hope shortly that legislation will be introduced to enable us to ratify the complementary Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation.
If I may say a final word about the incident of 8th February, it is right that this matter should have been brought out into the open and I am grateful to my hon. Friends the Members for Abingdon and Gloucester. It is also clear that responsibility for this serious lapse in security rests with B.A.A. and B.O.A.C. However, it would be less than fair if I did not draw attention to the actions of the two gentleman involved. Apart from the notices displayed at the control gate they must have known, since one of them at least was a frequent visitor to Heathrow, that they had no right in the circumstances to be on the airside of the airport. Furthermore, and by their own admission, they deliberately misled the control post operator by telling him that they had a direct loading on to the B.O.A.C. flight.

Mr. Neave: That could not possibly excuse this most serious breach of security. It is hardly worth mentioning. The Chairman said that they were bluffing. That does not matter in the least. It may have been questionable. What is really not questionable, however, is that the system broke down so badly in this case that my hon. Friends had to apologise to the House.

Mr. Grant: Yes, and nothing that I have said should indicate that we take other than the most serious view of the matter; we completely accept that this was a total breakdown of security. My hon. Friend's constituent immediately


brought it to the attention of the authorities and there has been no attempt on his part to conceal the actions that they took.
The incident, deplorable though it was, is not without its compensatory aspect since it has brought to light a serious

security weakness at the airport, which steps have now been taken to eliminate.

Question put and agreed to.

Adjourned accordingly at three minutes to Twelve o'clock midnight.